Hoping to blunt the momentum of Obamacare repeal, officials are spending the closing days of the Obama administration trying to push the idea that the president’s signature healthcare law is a success. But a new administration report touted for showing growing enrollment on the law’s exchanges also contained bad news: Insurers are having no better luck convincing younger Americans to purchase coverage.
The failure of Obamacare to sign up enough younger and healthier individuals to offset the cost of covering older and sicker enrollees is at the root of problems encountered by the law’s exchanges. This is why insurers have been losing billions of dollars and have responded by some combination of raising premiums, slashing networks of doctors and hospitals, and exiting Obamacare markets altogether.
Taken together, these problems have led to higher costs and fewer choices, and they have fueled Republican arguments that repealing the collapsing law is a necessary first step toward fixing the healthcare system.
For all the talk by the administration of a stabilizing insurance market in 2017, the latest enrollment report released by the Centers for Medicare and Medicaid Services showed that just 26 percent of the 11.5 million Obamacare insurance signups came from the crucial 18-year-old to 34-year-old demographic — the same proportion as 2016, which was a disastrous one for many Obamacare insurers.
It isn’t surprising that Obamacare — a program that forces individuals to purchase comprehensive insurance policies and limits how much insurers can vary premiums based on age — would be less popular among those with the lowest medical costs.
The regulatory and subsidy structure of Obamacare simply isn’t designed to make insurance an attractive investment for younger people, as becomes quickly apparent for anybody who spends time with Kaiser Family Foundation’s Obamacare subsidy calculator. As an example, a 60-year-old non-smoker earning $30,000 a year could expect to earn $6,706 in subsidies to purchase health insurance. That estimated national average is nearly five times more than a 30-year-old non-smoker at the same income level, who would stand to receive $1,358. The result is that the cost of a benchmark silver plan would the same for each of them. But the $207 monthly premium represents a much better deal for people nearing retirement age than for those who are half their age.
I wish I could report that Republicans are poised to fix this problem as part of their plans to repeal and replace Obamacare, by making insurance a cheaper and more attractive investment for young individuals, but they are likely to encounter obstacles, some of their own doing.
To start, no single policy within Obamacare is more responsible for driving up the cost of insurance on younger Americans than the regulation that prevents insurers from charging older enrollees more than three times as much for coverage than they charge younger enrollees. But due to the intricacies of the process being used to pass repeal legislation with a simple majority in the Senate, Republican leaders believe they can only repeal tax and spending provisions of the law. Thus, unless Republicans can find a way to get eight Democrats on board, it will be difficult to undo this regulation. Given that the 3:1 ratio is embedded in the law itself, it would also be difficult for Rep. Tom Price, President-elect Trump’s pick for secretary of Health and Human Services, to blunt the regulation through administrative action.
Beyond this, Trump himself has used the type of rhetoric that will make it harder for Republicans to craft an alternative that delivers cheaper options to younger Americans. The main policy that would make sense for somebody without many medical bills is catastrophic coverage that would protect against financial ruin in the event of a major unexpected accident or illness, but that would otherwise have individuals pay out-of-pocket for routine visits to the doctor (perhaps with the help of a tax-advantaged health savings accounts).
However, Trump has made attacks on high-deductibles a central part of his criticisms of Obamacare. In his first press conference as president-elect, Trump said, “You have deductibles that are so high that after people go broke paying their premiums, which are going through the roof, the healthcare can’t even be used by them because the deductibles are so high.”
Such repeated statements by Trump and other Republicans could have the effect of boxing the party in, when they’re already having a heck of a time crafting health policy.
