Higher premiums, impenetrable bureaucracy — where’s the upside?
Obamacare has enmeshed many Americans in a bureaucratic nightmare. True, the law has helped some uninsured people obtain coverage. But millions of people have seen their health-insurance plans canceled, because the plans did not meet the requirements of the Affordable Care Act. Others, particularly young Americans, have seen premiums rise to pay for the roster of newly added benefits.
Tommy Groves (not his real name), a young professional working at a small firm in Washington, D.C., was among the nearly 5 million Americans who received termination-of-coverage letters from their health-insurance providers because their plans did not comply with the ACA’s requirements. While about half the states offered to extend canceled plans for another year, later increased to two years, the District of Columbia required its residents to get new insurance.
Tommy had no choice but to grudgingly visit D.C. Health Link and attempt to sign up for an insurance plan on the ACA exchange. He did not get very far. Besides the embarrassing computer difficulties that became infamous on the state and federal exchanges, massive technological problems with “back-end functionality” also plagued the site. D.C. Health Link was unable to verify Tommy’s identity, and after hours of back-and-forth on the phone with an ACA help center, he was told to send in a paper application.
After many phone calls and countless hours on hold over a period of weeks, and despite multiple assurances to the contrary, Tommy was informed that his paper application had been lost. Finally he was directed to a place where he could sign up in person.
This attempt, too, did not succeed, as the “navigators” there had been instructed not to accept paper applications any longer. After he had spent hours more on the phone with D.C. Health Link over several additional weeks, the online system was finally able to verify his identity, and he met the deadline for purchasing health insurance.
“I don’t want other people who are thrown off their employer’s health insurance to go through what I did,” Tommy told us. “It was miserable and a complete waste of my time. Nobody listens to you. Nobody takes responsibility. The only advice I give people who are going to be stuck dealing with the health-care exchanges is, ‘Get ready for the bureaucracy.’”
Tommy’s premium for his “silver plan” went up to $225 a month from his $175 pre-ACA rate. Both plans cover the health-care services he wants, but his new plan includes services that he does not need, such as maternity care, pediatric dental care, mental-health coverage, and substance-abuse treatment. His deductible increased from $1,400 to $1,500 for in-network coverage, and from $2,800 to $3,000 for out-of-network coverage. Tommy is now paying more for coverage that is less valuable to him, and all after he was forced to spend dozens of hours on the phone.
No matter which way young people turn, the ACA will take a toll on their pocketbooks.
Young people have no way out of this minefield. Either they must buy expensive coverage for services they do not need, or they must pay a fine for refusing to buy insurance under the “individual mandate.” No matter which way young people turn, the ACA exacts a toll on their pocketbooks.
This is especially true since the law artificially holds down premiums for older people and raises the price for the young. Since insurance companies are not allowed to charge older people more than three times as much as younger people (a provision known as “modified community rating”), the insurance companies have no choice but to pass the health-care costs of older people on to the young in the form of higher premiums. This is a major factor behind the low number of young people who have signed up for insurance under the ACA.
Before the law was enacted, the typical cost of insuring an 18-year-old was one-fifth that of insuring a 64-year-old. Because older people are at much greater risk of serious health problems than people just out of high school, it makes sense that insurance companies would charge the 64-year-old more. But income typically rises with age, so most 64-year-olds would be better able to afford the higher premiums.
Jason Church, a retired Army officer who was injured in the line of duty, knows the difficulties young people face due to rising health-care costs, many of which are related to the ACA. Jason is covered by the Defense Department’s Tricare, so he is free from the direct effects of the ACA as he recovers from his injury. But he sees what other young people are going through and cannot help worrying about how they will be affected.
“Are enough healthy, young people signing up for the law to cover the costs of insuring older people?” Jason asked us. “I personally would pay the penalty instead of paying more for insurance coverage I do not need, especially while the penalty is so low. I am sorry for those who have lost their plans and are stuck shouldering the costs of ACA.”
Not only do young people face higher premiums, but they also have a harder time paying for them. This more than negates the benefits to young people of being able to remain on their parents’ insurance plans until they are 26.
Washington should repeal the ACA’s “essential health benefits” requirements, so that young Americans would not be forced to buy coverage they do not need. It should also increase competition in the health-insurance market by allowing people to buy insurance across state lines and affording individuals the same tax advantages on health insurance that employers currently receive.
The pre-ACA status quo in the health-insurance market was not optimal, but Washington has made matters far worse, especially for the young. In order to truly help the uninsured, Congress should repeal the ACA and create a tax credit or deduction to allow people to buy any insurance plan that suits them with pre-tax dollars; this would remove one of the main benefits now bestowed unequally on employer-provided coverage. Until steps such as these are taken, the war against America’s youth will only accelerate.
— Diana Furchtgott-Roth is a senior fellow and Jared Meyer is a fellow at the Manhattan Institute. This article is based on their new book, Disinherited: How Washington Is Betraying America’s Young (Encounter Books, May 2015). Follow Diana and Jared on Twitter @FurchtgottRoth and @JaredMeyer10.