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20 November 2013

Sorry, Dems, Republicans Haven't Scared Young Invincibles From Enrolling In Obamacare. They Are Acting In Their Own Self Interests.

New on the Obamacare Truther agenda: Republicans are responsible for young voters not signing up in droves for Obamacare because they have skeered them or something.  From Dana Milibank

The Republicans’ scary-movie strategy has some logic to it: If they can frighten young and healthy people from joining the health-care exchanges, the exchanges will become expensive and unmanageable. This is sabotage, plain and simple — much like the refusal by red-state governors to participate in setting up the exchanges in the first place. But those sabotaging the new law should be careful what they wish for: Instead of killing the law, they are likely to make it more expensive to taxpayers. Their efforts could have the effect of turning Obamacare, which relies on private insurance and the free market, into just the sort of big-government entitlement Republicans were worried about in the first place.

If they succeed in scaring people away, the ones who join exchanges are likely to be older and sicker, making the insurance pool costlier to insurers. As Larry Levitt, a senior vice president of the Kaiser Family Foundation, explained to me, if costs are more than 3 percent higher than anticipated in the first few years of Obamacare, the federal government will have to pick up at least half of the additional expense.

If the health-care exchanges continued to attract only the elderly and the sick in future years, premiums would rise and the only people likely to remain in the program will be those who qualify for the federal subsidies, which would increase sharply because individual contributions are limited to a percentage of the recipient’s income.

“The more successful opponents are at discouraging young and healthy people from enrolling, the bigger share of the cost the federal government will end up covering,” Levitt said. “The implication of encouraging young and healthy people to sit on the sidelines is that costs are shifted to the federal government.”

No, young consumers have not been frightened of Obamacare.  They are correctly frightened by what Obamacare will do to their wallets, especially in Obama's economy.

Obamacare is based on a completely counterintuitive premise:  Young adults will want to purchase more insurance than they need and pay much more than they did under the old system for healthcare they will not use in order to keep the premiums for older people and those with preexisting conditions.

This was never going to happen.

As I have explained to many a Prog, the community rating requirement in Obamacare prohibits insurance companies from charging older and sicker people more than 3 times what they bill their healthy customers.  Keep in mind that the Young Invincibles consume $1 in healthcare whilst people in their 60s, for example, consume $6.  Thus, under Obamacare, those that consume $6 in healthcare can be charged no more than three times that those that consume only $1.  Since insurance companies would quickly go out of business if they continued to charge the Young Invincibles $1 and cut those who consume $6 in healthcare per year only $3.

Everyone with any sense understood this.  They also realised what the result would be.  Of course the Young Invincibles were going to have to pay more so that the older and sicker, including those with preexisting conditions, could pay less. 

The problem with this scheme, however, is that is disregards human behaviour.  It may work in theory, but it doesn't work in practise.  Young people are not going to rush out to spend their few dollars to subsidise people, who are generally better off than they are.  Obamacare was ALWAYS going to increase premiums for a large swath of the American population, including those that work at small businesses, who aren't even subject to the employer mandate.

This is especially true considering the fact that Obamacare doesn't actually attack the main problem with healthcare: the cost...well, outside of Medicare/Medicaid and the IAPB anyway.  Competition would reduce costs, but Obamacare doesn't do that, especially in less populated areas where 'choice and competition' means, as an East German apparatchik might have said, 'you can have the black Trabant or the black Trabant.' In many areas, there is only one carrier.  Even when there are more than one carrier, there is no real competition.

Finally, if I understand the issue correctly, the Obamacare 'subsidies' are actually tax credits, which means that someone entitled to government assistance doesn't receive it until she files her tax return.  This would require the 'subsidised' person to still come up with the full premium - out-of-pocket - before she sees a dime.  If a person couldn't afford for a 'substandard' policy before Obamacare, how will she be able to pay the premiums on an Obamacare-compliant policy?  In other words, if she couldn't make a $150 payment per month, how will she be able to pay a $300 premium even if she gets tax credits?  Obamacare still requires her to come up with $1,800 more per year when she couldn't afford the $1,800 for the pre-Obamacare policy.

How many people, who actually understand all of this, are going to be flocking to purchase health insurance?  Probably a lot less than will be needed for Obamacare to succeed.  Sure, many Americans will purchase health insurance and comply with the mandate, but what else are they supposed to do?  Go without health insurance?  Pay 1% (then 2%, then...) of their income in penalties and roll the bones that they don't get sick?  Even if they do purchase Obamacare insurance policies that doesn't mean that they will come to 'love' more than people, who are forced to use elevators, come to love elevator music.  They are a captive audience.  Yet, this 'captive audience' will still lack those that cannot afford health insurance.

How does the Obama administration feel about those being priced out of the market?  Just look at what Jay Carney said about the single mom, who Obama cited as an Obamacare 'success' story in his remarks in the Rose Garden a few weeks ago.  She was so excited about getting health insurance...until she found out that she didn't qualify for subsidies.  Now, as before, she cannot afford health insurance and the administration's response is: 'The White House is certainly as sorry as we can be that Jessica can’t afford it, but that the law is still doing plenty of good.'  That isn't exactly a 'success' story and shows the callousness of Obamacare.

Obamacare is predicated on people acting against their own self interests, which is always a disastrous bet to make.  To believe that people will act against their own self interests requires unicorn thinking.

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