This is why I am concerned that the ACA could actually cause the number of our covered employees to decrease, particularly in the first year. The penalty for declining coverage will be low compared with the cost of coverage; and employees will know that if they happen to get sick, they can get insurance after that. So the economically rational decision for young people, like our crew employees, is to pay the penalty and forego the insurance. Despite what the government may believe, our employees are smart enough to figure this out.

For insurers, it’s simple math: Premiums collected must exceed claims paid. If too few young healthy people enroll, insurers will raise premiums on those who do. This could result in a spiral of rising premiums—causing more healthy people to drop coverage, driving premiums even higher.

The rising cost of insurance affects people whether they purchase insurance through their employers or an exchange, since both depend on private insurers. If insurance costs go up, taxpayers also may end up paying more to foot the bill for the higher cost of subsidized insurance. This is particularly concerning since the administration has announced that it will be unable to verify whether applicants for subsidies actually qualify for them. The subsidies are likely to be very popular.