AP: Young adults will see a 17% increase in premiums under ObamaCare

posted at 10:55 am on March 30, 2010 by Ed Morrissey

During the entire ObamaCare debate, young voters consistently provided the most support for the government overhaul of the health-care system.  Groups that encourage the youth vote campaigned in support of it, including the “F*** the Vote” campaign by Rock the Vote that had supporters pledging to only have sex with other Obama acolytes.  Now that ObamaCare’s passed, the Associated Press finally explains to them a simple truth about federal mandates and the cost structure of insurance risk pools:

Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans — a shift expected to raise insurance premiums for young people when the plan takes full effect.

Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press. The analysis did not factor in tax credits to help offset the increase.

The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.

I explained this in my response to the “F*** the Vote” campaign:

First, the young people to whom they’re preaching largely avoid buying health insurance, and for good reason. They don’t need to spend $3600 per year (Minnesota’s average in 2007) to cover a couple of doctor visits every year. They’re better off buying catastrophic health insurance, rather than the mandated comprehensive coverage under ObamaCare, and use HSAs to pay for their health care with tax-free cash. That’s what Keith Olbermann does, after all, and he’s a lot older than the RtV target audience.

Who benefits from this push? The young adults don’t; they’re going to pay a lot more than they receive. Insurance companies will benefit by forcing them into the system, reducing the risk and spreading the costs over a wider base. I don’t consider insurance companies evil, but many of the ObamaCare advocates do — and yet they’re pushing their followers to subsidize slight declines in health insurance premiums for the older generations in America. It’s just like Social Security, only with a worse payoff in the end.

But there is more than just this mechanism driving costs up for younger people.  The new law restricts the ability of insurers to charge higher-risk pool members more in premiums.  This helps keep prices lower for middle-aged and senior customers by transferring the costs to younger, healthier clients:

At issue is the insurance industry’s practice of charging more for older customers, who are the costliest to insure. The new law restricts how much insurers can raise premium costs based on age alone.

Insurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old.

The rest will be shouldered by young people in the form of higher premiums.

This is what happens with “community pricing.”  Costs don’t disappear; they just get allocated in a different manner.  Instead of the actual higher-cost clients paying their share of the burden, they now get subsidized by low-risk clients instead.  Thanks to Congress, these low-risk clients no longer have the option of choosing high-deductible catastrophic insurance with HSAs for routine medical work, but have to buy comprehensive insurance plans that wind up subsidizing their parents and grandparents.

Or, to put it in simpler terms, they’re getting f***ed by the same people who pushed the “F*** the Vote” campaign and the Democrats.  Had the younger voters taken the time to learn something about risk pools, insurance, and the experience of Massachusetts and Maine using the same kind of mandates, they’d have told Rock the Vote to f*** off.  They still have the opportunity to deliver that message to Democrats in November.


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Shock the Monkey on March 30, 2010 at 11:43 AM

I get to be lumped in with the hippies, being born at the end of the baby boom, you gets the dumbest generation. A cross we all have to bear. ;-)

MNHawk on March 30, 2010 at 12:29 PM

Hey there young ‘uns! Enjoy your hope and change!

jimmy2shoes on March 30, 2010 at 12:32 PM

a 17% increase THIS MONTH. What about next month?

Pablo Snooze on March 30, 2010 at 12:20 PM

And what happens after the first 10 years of Obamacare? Remember, they are using 10 years of revenues to pay for only 5 or 6 years of coverage.

When they actually have to pay for 10 full years of coverage using 10 years of revenue, well….. You don’t have to be a rocket scientist (or even a Harvard-educated, Nobel prize winning super-genius) to know that you are going to have to raise taxes again.

UltimateBob on March 30, 2010 at 12:32 PM

*The article mentions that tax credits could offset these increases. Even though you folks on the right loooove your tax cuts, somehow Morrissey finds this unworthy of comment.

You do realize that there is a difference between a tax credit and a tax cut, don’t you? Of course you don’t.

jimmy2shoes on March 30, 2010 at 12:34 PM

BTW, the 17 percent increase is above those who currently have insurance.
The youth that does not will be coming from zero to the full amount of the premium. In the Minnesota example, thats 3600 plus 17 percent increase at the bare minimum for basic coverage.
The tax incentives don’t matter much and is why it is not included.
You can give tax breaks to people who don’t pay any federal taxes all you want. They already don’t pay . 0-0=0

LeeSeneca on March 30, 2010 at 12:35 PM

Heh, the Miracle in your Face says he’s going to get more aggressive with his foes. When was he cordial, ever? This is a Peacock in Chief.

Youngens, grow up, dummies. You will be ruined from so many angles.

Schadenfreude on March 30, 2010 at 12:38 PM

*Worst of all, there’s no comparison to how much premiums would have increased if the health care reform hadn’t passed.
orange on March 30, 2010 at 12:28 PM

Behold, the Media and leftists rallying cry covering all things Obama.

Sure, he made things worse, but imagine how much worse they could have been!!!

cntrlfrk on March 30, 2010 at 12:38 PM

Assuming this bill does not get repealed, I look forward to the look on the young persons face, and their reaction when they finally get what has happened to them.

bbordwell on March 30, 2010 at 12:40 PM

orange on March 30, 2010 at 12:28 PM

Except Obama said premiums would decrease by $3000.

Let us know when that happens

Chuck Schick on March 30, 2010 at 12:45 PM

Behold, the Media and leftists rallying cry covering all things Obama.

Sure, he made things worse, but imagine how much worse they could have been!!!

cntrlfrk on March 30, 2010 at 12:38 PM

Are you denying that health costs have been going up by massive amounts over the past several years? If you are, you’re just denying reality.

If you’re not, then surely you can see how it only makes sense to compare a vision of 2014 with the health care overhaul to a vision of 2014 without it. That’s the apples-to-apples comparison. Comparing 2014 with the health care overhaul to 2010 is meaningless.

orange on March 30, 2010 at 12:46 PM

I can never figure out what Obama is doing in that photo.

Pretending to ride a motorcycle? “Look at me, mom! Vroom! Vroom!”

Or, by the look on his face, maybe he just cut a stinky.

UltimateBob on March 30, 2010 at 10:58 AM

I always thought he was having a fart-lighting contest with Congress.

Chuck Schick on March 30, 2010 at 12:46 PM

Are you denying that health costs have been going up by massive amounts over the past several years? If you are, you’re just denying reality.

If you’re not, then surely you can see how it only makes sense to compare a vision of 2014 with the health care overhaul to a vision of 2014 without it. That’s the apples-to-apples comparison. Comparing 2014 with the health care overhaul to 2010 is meaningless.

orange on March 30, 2010 at 12:46 PM

It’s only been a week and the bar comes crashing down, just like the stimulus.

Chuck Schick on March 30, 2010 at 12:47 PM

Oh and we should mention that the “kids” on their parents plan till 26 are not on that plan for free.
The parents will have to keep paying the higher premiums and the parents will be responsible for portions not paid by the insurance company.

.

LeeSeneca on March 30, 2010 at 12:48 PM

Some amusing notes:

*The linked AP article says “Health premiums could rise 17 pct for young adults”. Ed Morrissey disingenuously changes that to “AP: Young adults will see a 17% increase in premiums under ObamaCare”.

The sun could rise in the east tommorow…

*The article mentions that tax credits could offset these increases. Even though you folks on the right loooove your tax cuts, somehow Morrissey finds this unworthy of comment.

It’s critical that every American know the difference between a tax credit and a tax cut. Please try to learn.

*Worst of all, there’s no comparison to how much premiums would have increased if the health care reform hadn’t passed. If they increase 17% under this plan, but would have increased 27% without it, then that’s a good thing.

*shakes head*

visions on March 30, 2010 at 12:49 PM

I think Obama is saying “F*** off” to voters already…..no?

http://online.wsj.com/article/SB10001424052702303410404575152110331938210.html?mod=WSJ_hpp_MIDDLETopStories

PappyD61 on March 30, 2010 at 12:56 PM

And what happens after the first 10 years of Obamacare? Remember, they are using 10 years of revenues to pay for only 5 or 6 years of coverage.
UltimateBob on March 30, 2010 at 12:32 PM

And that’s assuming rationing doesn’t kick in early on when the 5 or 6 years starts.

Mr_Magoo on March 30, 2010 at 12:58 PM

The democrats were smart to put the burden of Obamacare on the young people. After all, the older folks won’t be around since they are non-productive and are egregious polluters.

Democrats know what is best for each and every one of you.

daesleeper on March 30, 2010 at 1:02 PM

“Young Americans!
You thought I wouldn’t screw you?
Think again, suckers!”

Haiku Guy on March 30, 2010 at 1:02 PM

Between 1999 and 2009, health insurance costs increased a total 0f 131%, for an annual average of 13.1%. The next decade is possibly going to see an untouched 166% increase–about the same as the 17% under O-Care. No net change, but for taxes and fines, etc. There’s no way to predict O-Care is going to actually save anyone any money.

Some in the middle class won’t see any savings at all, because…”they make too much money for assistance, and yet they make too little to afford health insurance without it being a large burden.”

Here is the link:

http://money.blogs.time.com/2009/09/16/health-insurance-premiums-up-131-in-last-ten-years/

Liam on March 30, 2010 at 1:03 PM

Actually Liam- 131% over 10 years is more like 9% annually because of compounding.

17% would be double that, Orange.

Chuck Schick on March 30, 2010 at 1:21 PM

Chuck Schick on March 30, 2010 at 1:21 PM

I was using straight-up numbers, rather than going by the effects of compounding. You are correct, of course, and the 17% annual possibility of future growth is uglier.

The bottom line, which only liberals don’t get, is that O-care isn’t going to deliver as promised to the People. It won’t even come close.

Liam on March 30, 2010 at 1:35 PM

So how much of an increase in premiums will there be for young people who didn’t have insurance before?

100% ?!

tom on March 30, 2010 at 1:41 PM

tom on March 30, 2010 at 1:41 PM

That depends on which way you want to do the math.

Paying nothing now, but paying $1200 next year, is an increase of $1200 (0 + $1200 = $1200)

Expressed as a percentage, however, it is (0 X $1200 = 0)

Guess which method of calculation the Dems will use?

Liam on March 30, 2010 at 1:49 PM

How many more times will I post that Naked Emperor News video of Obama promising to lower premiums $2500 20 times during the campaign and not have it show up on the MSM.

Yakko77 on March 30, 2010 at 1:53 PM

I tried mentioning this to someone on Facebook about rising premiums. She didn’t care and was “happy” to foot the bill for others “less fortunate.” Oh, and she said that arguing what the Founding Fathers would have wanted in today’s technological era was pointless, because they may have argued differently in today’s climate or something regarding a large federal government. RARGH.

I, on the other hand, being in the younger (though not entirely healthy) group, am P.O.ed about having to pay higher premiums in the future. Ugh.

So when does this take effect for us young’uns? The premium increases I mean. This month? GREAT. Just freaking GREAT. *sigh* I don’t know how much more of this I can take. I keep coming to HA and other conservative poli blogs only to keep getting more bad news, and I just…I don’t know if I can keep coming back to hear it. Anyone else feel massively discouraged like this? I can’t be alone in just wanting to crawl into a hole.

JediArashi on March 30, 2010 at 1:54 PM

I was using straight-up numbers, rather than going by the effects of compounding. You are correct, of course, and the 17% annual possibility of future growth is uglier.

The bottom line, which only liberals don’t get, is that O-care isn’t going to deliver as promised to the People. It won’t even come close.

Liam on March 30, 2010 at 1:35 PM

Sorry, I wasn’t trying to be an ass, just pointing out to Orange how much worse 17% annually was.

Chuck Schick on March 30, 2010 at 1:54 PM

Jeez, it always impresses me how the Left seem to use the ‘All or NOTHING’ argument.

If you’re not, then surely you can see how it only makes sense to compare a vision of 2014 with the health care overhaul to a vision of 2014 without it.

Why? If this version of health reform didnt pass, would that mean that NO health reform would pass? Surely you are not that naive, are you?

Did you even take the time to read the proposals of Republicans? Alas, I have to step back on that comment, even if you did read them, you sadly dont understand the implications of the ideas presented, nor how the free market works.

B3 on March 30, 2010 at 2:13 PM

So when does this take effect for us young’uns? The premium increases I mean. This month? GREAT. Just freaking GREAT. *sigh* I don’t know how much more of this I can take. I keep coming to HA and other conservative poli blogs only to keep getting more bad news, and I just…I don’t know if I can keep coming back to hear it. Anyone else feel massively discouraged like this? I can’t be alone in just wanting to crawl into a hole.

JediArashi on March 30, 2010 at 1:54 PM

The increases might start in January. I read a blurb that’s the soonest a rate hike can be implemented. I might be off on some details but January 1 seems to be the target date for the insurers.

You’re not alone feeling low. It’s hard not to be, really. But rather than sink in a leaky rowboat, bail like crazy! Talk to friends and family, and have them talk to others, too. Give others the reasons why you feel as you do, and the tools and information to change minds. It’s not easy, to be sure, but it can be done. Peaceful protest, exchanging information, and voting are all we have right now. Gandhi proved the methods we have available are very effective.

Chuck Schick on March 30, 2010 at 1:54 PM

No problem, friend. You’re right and made my point all the better. Thanks!

Liam on March 30, 2010 at 2:28 PM

tom on March 30, 2010 at 1:41 PM

That depends on which way you want to do the math.

Paying nothing now, but paying $1200 next year, is an increase of $1200 (0 + $1200 = $1200)

Expressed as a percentage, however, it is (0 X $1200 = 0)

Guess which method of calculation the Dems will use?

Liam on March 30, 2010 at 1:49 PM

Shouldn’t you be taking the increase ($1200) and dividing by the original amount ($0)? Of course, you can’t divide by zero…..

tom on March 30, 2010 at 2:59 PM

We can’t see the forest for the trees. Barry has the momentum back. We in the GOP are struggling to get behind a winning message because our leaders are cowards. I don’t see a large GOP victory in Nov. If we don’t take back the house the left will see this as a victory for the president, even with the slightest of majorities. We seem to be majoring in the minors here.

inchdeep on March 30, 2010 at 3:04 PM

Shouldn’t you be taking the increase ($1200) and dividing by the original amount ($0)? Of course, you can’t divide by zero…..

tom on March 30, 2010 at 2:59 PM

Well, in that case, your premium dropped 3000%

Gotta luuuuuv that ObamaMath! LOL

Liam on March 30, 2010 at 3:24 PM

We can’t see the forest for the trees. Barry has the momentum back. We in the GOP are struggling to get behind a winning message because our leaders are cowards. I don’t see a large GOP victory in Nov. If we don’t take back the house the left will see this as a victory for the president, even with the slightest of majorities. We seem to be majoring in the minors here.

inchdeep on March 30, 2010 at 3:04 PM

Sorry, can’t see where Obama has the momentum. Looks to me like the Dems are in trouble in November, unless they come up with some brand new trick.

tom on March 30, 2010 at 3:29 PM

inchdeep on March 30, 2010 at 3:04 PM

Ah, but the electorate is fickle. And polls are designed to reach a desired result.

Seriously–if Obow has a 60% rating in polls, yet people all over America–even in the most liberal counties–talk about him in ways outside the polls, which is the better gauge?

Polls have become ‘news’. In the end, they mean nothing. They are aimed to support those on the chosen side, and also hope to sway the fence-sitters to their side.

I don’t believe in the idea of the ‘moderate’, that kind of guy who’s so ‘thoughtful’ he needs so much time to make up his mind that he waits to the last minute. Such people, to me, will run to bomb shelters at sight of gang shooting. Funny–they think themselves so ‘thoughtful’.

Polls mean nothing. They’re fillers for air time. The way to gauge national mood is to see what’s happening out there, and that is learned by being well-informed.

Again, polls mean nothing. We each vote our conscience anyway.

Liam on March 30, 2010 at 3:33 PM

The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.

Obama to American YOUTH: ‘Give me ALL your change’!
*free* healthcare is gonna cost the youth a TON of money. Oh and SS is set to go $29 BILLION in the hole this year.

TN Mom on March 30, 2010 at 4:54 PM

@Liam on March 30

The polls are in our favor now but the attitude of those who are supposed to lead the charge are not helping us at all. So you miss my point. They are to concerned again about not offending people instead of leading. We need to be like the Dem’s in one respect, “Damn the torpedoes, full speed ahead.” That’s what Barry is doing and he will win on it. We need to do the same. Every time we think we have Obama beat he doubles down and eats our lunch. November is going to be a bust if we keep this up.

inchdeep on March 30, 2010 at 5:13 PM

Liam on March 30, 2010 at 2:28 PM

My family and some of my friends are definitely with me, it’s just that a lot of my friends from college and high school are, well…”YAY OBAMA!” It’s the problem with living in this stupid generation. Ugh.

Ironically, I’d be more politically active in protesting and such in the health care debate if my health weren’t so poor. Ah, life. (It’s mostly pain-related issues that no one wants to treat, also because of my age, but that’s a pity party I don’t want to have.)

I’m just thinking maybe I need a teensy break. Time to refresh, you know? Thanks for the encouragement, Liam. *hug*

JediArashi on March 30, 2010 at 6:48 PM

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