If Pajama Boy can’t sell health insurance, who can?

Despite ads with Pajama Boy, keggers and casual hook-ups (really?), the 18 to 35 crowd apparently isn’t rushing to buy health insurance.

Or maybe Creepy Uncle Sam is scaring them away. Or the lame technology.

Related news: Jimmy Kimmel Savages ObamaCare and Uninformed Young People Who Support It

Whatever the reason, this week it’s been reported that only about 25% of uninsured young adults have enrolled in Obamacare plans. The administration has said that at least 38% of this age group is necessary to prevent “adverse selection” (too many sick and old) and higher premiums in 2015.

Obamacare haters scream “Death spiral!” and supporters simply shrug and say, “Well, that’s good enough, for now.”

I don’t want premiums to go any higher (although they inevitably will, no matter what, and I think they are already too expensive), but I don’t blame young people for shying away from Obamacare policies.

High premiums, low risk

Young people, especially young men, have been hit with the largest premium increases, because Obamacare imposes a “modified community rating” on insurance companies:

Premiums for older individuals cannot be more than 3 times higher than a younger person. Before the ACA, rates could be 5 times greater.

Premiums for women cannot be higher than premiums for men. Before the ACA, men were charged less.

Costs will vary from state to state, but studies have shown premium rate hikes for young adult males anywhere from 77% to 260%.

Those who consume the least health care will naturally subsidize those who consume the most. Since young males typically have minimal health-care needs, they’ll pay far more than their fair share.

Obamacare supporters are always quick to point out that subsidies will make insurance much more affordable. At the upper end of income eligibility, premiums are capped at 9.5% of income. Almost 10% of take-home pay? Just for premiums? That’s still a lot for a young person or a young family with many other bills to pay.

Deductibles are very high, too. For the cheapest bronze plans, the deductible for an individual is around $3,000 to 6,000; for a couple or a family with kids, the deductibles are in the $10,000 to $12,500 range.

Yes, young people get sick and are more likely to be in accidents. Some have pre-existing conditions and will definitely benefit from Obamacare. But in general, this age group is healthy and historically uses very little health care. More significantly, they perceive themselves as low-risk. When weighing the benefit of buying insurance for a not-very-likely catastrophe versus paying down student debt or financing a house or car, well…time will tell.

Two aspects of Obamacare will make opting out easier:

The penalty, or tax, is low. Only $95 or 1% of income the first year. And the tax can only be collected if a refund is owed.

Pre-existing conditions won’t preclude buying insurance in the future, even though plans can only be bought during open enrollment periods or after a major life event, such as changing jobs or getting married.

Little flexibility in benefits, cost

My niece, who very soon turns 26 and will be booted off her parent’s health insurance, wants health insurance. She is in medical school and understands the cost of health care and the necessity of insurance.

For a 26-year-old, an individual plan—on or off the exchange—in our state (Washington) costs about $200 per month.

Oddly, the single catastrophic plan, which was supposed to be an affordable choice for the healthy, under-30 crowd, also costs about $200 per month. In fact, it costs more than the bronze plan offered by the same company! And catastrophic plans are not eligible for subsidies.

The University’s coverage for students is a little more expensive, about $240 per month. The rates are all very similar because the “essential benefits” of all Obamacare plans are the same. Whether you need them or not, you have to pay for them.

Still, my niece, like most doctors-in-training, lives on student loans. She can’t afford $200/month.

She went to the exchange hoping she could find an affordable plan, but she doesn’t even qualify for a subsidy. Her income is too low. She only qualifies for Medicaid. Mortified at the thought of taking a government handout (“I wasn’t raised that way!”), she laments, “I just want just-in-case insurance, you know, if something really bad happens. Why can’t I find an inexpensive plan, that I can afford, that will cover me if I get in an accident or something?”

You mean a bare-bones catastrophic plan? Sorry, honey, those aren’t allowed anymore.

Sláinte,

Frugal Nurse