A 25 year-old earning less than $24,000 could save $1,000 next year by going without insurance and paying a penalty rather than purchasing coverage on an Obamacare health insurance exchange, according to a new study from the National Center for Public Policy Research.
In the study, which took a detailed look at the choices facing younger consumers once President Obama’s health care law kicks in, author David Hogberg concludes that the program is going to be a rotten deal for the very Americans whose participation is necessary for it to succeed.
Without a sufficient number of younger and healthier Americans in the risk pool, it will become difficult, if not impossible, for insurers to offer affordable coverage to older and sicker Americans, especially those with pre-existing conditions, as required by the law.
Obamacare seeks to attract younger Americans through the combination of a mandate requiring them to purchase insurance and subsidies to help them purchase government-designed insurance policies on a government-run exchange. But provisions dictating the generous benefits that insurers must provide increase the sticker price of health coverage.
Hogberg determined that the penalty for going without health insurance ($95, or 1 percent of taxable income in 2014) is too low while the cost of purchasing insurance on the exchange (even after subsidies) will too high to attract enough younger and healthier participants.
According to his analysis, 3 million 18 to 35 year-olds would save at least $1,000 annually by paying a penalty and going without insurance once the law kicks in, while 3.7 million would save at least $500.
Read the full report here.