Age Matters
Under the heading “Obamacare Doesn’t Screw Young People,” Matt Yglesias admits that ObamaCare over-charges the young in order to under-charge those who are older. But he defends this practice by writing:
Today’s young people will be tomorrow’s old people… today’s 25 year-old is tomorrow’s 55 year-old. Whether the Affordable Care Act is really in the interests of the young cohort just comes down to whether or not it’s a good idea overall.
What’s wrong with this argument? Four things. First, let’s extend the logic a bit. Instead of shoving the cost of the 55-year-old off on the 25-year-old, how about shifting it to 15-year-olds or five-year-olds? Arbitrary redistribution is bad social policy. Second, people in general should pay for what they get. When they don’t, the under-charged will over-insure and the over-charged will under-insure. Third, the average 55-year-old has more income and wealth than the average 25-year-old and thus is better able to pay. Odds are the older person has paid off his mortgage. His kids are likely done with schooling. ObamaCare thus violates the principle of ability to pay. Finally, what is being described here is one more Ponzi scheme under which each generation pays for the previous generation and hopes that the succeeding generation will honor the chain letter. Surely we have enough government sponsored chain letters already.
On the other hand, there is a certain poetic justice that young people, disproportionately Obama voters, will also disproportionately fund the medical bills of older people (who were much less enthusiastically in the Obama camp). Well, that is–if the young buy insurance. The structure of the penalty ensures that non-compliance will be rampant, and this cost-shifting will make it more so.
Excellent post.
What sounds good in theory doesn’t work in practice.
Most Baby Boomers paid relatively low premiums throughout their youth. Health care was cheaper, and their employers spread the risk among young and old. Many of them now want highly-subsidized “guaranteed-issue” individual policies so they can retire early without need of an employer plan to cross-subsidize their health plan.
If we all had an HSA we started while young, we wouldn’t need healthy young people to subsidize us when old.
“admits that ObamaCare over-charges the young in order to under-charge those who are older. But he defends this practice”
There is no justification for this kind of policy.
As a “young” adult, I agree on the assessment on the fundamental fallacies with the article’s logic. If you want to make something more affordable, it’s not logical to increase the price to one segment of the population so that another segment can see price reductions. I don’t know how accurate the article is in terms of factual evidence, but at least I know it’s logic doesn’t make much sense.
I don’t think people my age would mind helping someone else out in need, but set it up as a tax break to a charity hospital: instead of insurance that three times as expensive, require us to donate some of that money to our local hospital in exchange for a tax break.
As is, this plan will drive a wedge between the young and old.
I have been thinking about who benefits the most from the ACA. It is not the willfully uninsured because they are willfully uninsured. It is not the poor or children because they have Medicaid and Chip. It is not the employees of big corporations because they have group. It is not those with pre-existing conditions because every state in the union has a pool for those risks.
The only group I can come up with is moderately healthy fifty somethings that are the first to go during any down-sizings. They usually end up working as contractors for the rest of their lives and have the AGI best suited to max the subsidies.
I don’t believe it is fair to charge one person more money and another less money, whether the individual is young or old. There are a lot of young sick these days and not all older people are sicker. Everybody needs medical care and treatment; the key is prevention with yearly check ups and exams. Many people have jobs with insurance and do not use it to get their annual eye or physical exam and semi annual teeth cleaning. At my job and with my particular insurance, there is no co pay for preventive service; they want you to go to doctor. It’s cheaper on the corporation if your health problems are known sooner then later. But most people usually never go the doctor and only wait until the problem is worse or in its late stages and many of these people use the Emergency room as a doctor and it is not, which is more expensive than a doctor visit. The hospital will not turn people away if they cannot pay, but if you want everyone to have insurance someone has to pay.
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