Five days before Obamacare's exchanges begin open enrollment, long-awaited rates for federally facilitated exchanges (FFEs) have been released.
The Department of Health and Human Service’s headline? “Rates are lower than expected!”
This optimistic positioning misses the point, however. The typical 27-year-old, who might still be living with his parents, doesn’t care about CBO’s premium projections.
Come October 1, these “young invincibles” will run through a very simple calculus – pay the penalty ($95, or 1 percent of your income) or buy health insurance.
Sixty-three percent of eligible 27-year-olds, according to HHS, will face monthly premiums of over $150 for the cheapest, “bronze”-level coverage.
For the many who won’t receive subsidies, the decision is a no-brainer – pay the penalty and go without coverage.
Indeed, even in the employer-sponsored market, where the insured pay only about one-third of the cost of their coverage, take-up rates (the share of people who actually accept employers’ insurance offers) are about 64 percent for young people.
With subsidies covering a smaller share of people’s premiums in Obamacare’s exchanges, that figure is likely to be even lower.
But not only are young people facing relatively high monthly premiums, these premiums are also significantly higher than what they can pay today.
A recent analysis by my Manhattan Institute colleague, Avik Roy, indicates that healthy young men will be paying premiums that are on average 99 percent greater than what they could be paying today.
For this group— critical to balancing out Obamacare’s risk pools—this is simply a raw deal. For Republicans in Washington, it’s exactly these “unexpected” consequences of Obamacare that have inspired the somewhat misguided defund-or-bust movement.
In his filibuster that began Tuesday afternoon, Sen. Ted Cruz, R-Texas, highlighted how Obamacare is likely to hurt, rather than help, many of its intended recipients, including the young and healthy.
It is understandable, then, that Cruz and his allies have pushed the defunding fight to the brink. But Republicans have other weapons in their arsenal. For starters, minor adjustments to Obamacare can help reduce premiums across the board.
These include broader age bands (the extent to which insurers can charge different rates for different ages) and higher limits on out-of-pocket spending.
More substantial fixes could target the unequal treatment of premiums in the employer market versus the individual market, as recently proposed by the Republican Study Committee.
A constructive approach that offers to mend (rather than repeal or defund) Obamacare is likely to win some backing from Blue Dog Democrats like Sen. Joe Manchin of West Virginia, giving it a realistic chance of passing both the House and Senate.
The Republican agenda shouldn’t focus on “defund or shutdown.” A defunding bill would get vetoed if it ever passed the Senate, and a shutdown wouldn’t stop enrollment in the exchanges.
We know what’s wrong with Obamacare, and in its attempt to reframe bad news, HHS is indirectly acknowledging that the law is headed for big trouble. The opportunity for conservative health-care reform is here – Republicans just need to grab it.
Yevgeniy Feyman is a fellow at the Manhattan Institute's Center for Medical Progress.