The American Interest
Analysis by Walter Russell Mead & Staff
Under the ACA Young Pay Now, Get Nothing Later

obamacare

In at least one respect, the ACA completely reverses the status quo of the insurance industry: under Obamacare, the riskier patients pay less. The WSJ breaks down the numbers, showing that younger, healthier patients will end up paying more for insurance than older ones, like 62 year old Robert Wengrow. To us, this looks like a straightforward case of the war against the young:

Insurers worry the subsidies could give customers like the Wengrows a bigger incentive to sign up for coverage than young people to offset their costs. For instance, a single 25-year-old whose earnings match the Wengrows’ $24,000, would spend $124 a month for the lowest-cost midlevel plan, while a single 62-year-old with the same income would pay $100.

This disparity emerges from a complex quirk in how the subsidies are calculated, the Journal’s analysis shows. The law sets maximum amounts that people must pay before subsidies kick in at specific income levels. Because premiums are higher for older customers, the value of the subsidies is also much larger. Thus, when older people use subsidies to buy coverage that is cheaper than the benchmark plan used to determine subsidies, they can end up paying less than younger people who earn the same.

In face of these numbers, supporters will note that the young might lose out now, but they’ll eventually benefit when they’re older and are subsidized by the next generation. This response assumes that Gen Y will eventually get the same benefits currently going to Gen X,  but there’s a lot of reasons to doubt that will be true.

Health care costs may have been slowing down lately, but even at reduced rates, they’re still rising relative to income. Our health care system is still bankrupting us, and will continue to do without true reform. If premiums keep rising, taxpayer subsidies will eventually be unable to keep up. Just as Gen Yers paying into social security their whole life will probably see reduced benefits, so too will they probably not get a full return on their investment through the ACA.

Published on August 31, 2013 12:10 pm
  • bpuharic

    Single payer systems in every country in the world are cheaper than our current system

    Yet the right refuses to go along

    As to a war against the young…we’ve had a 30 year war against the middle class in this country and the response from the right has been a collective sigh of relief that the rich are doing great

    • Corlyss

      “Single payer systems in every country in the world are cheaper than our current system”

      And those nations are going broke faster than we are. Damn straight conservatives oppose Dear Leader’s legacy project and proud to do so. I hope he chokes on his “legacy.”

      • bpuharic

        More Rush (PBUH) cliches.

        Sweden’s not. Canada’s not. In fact there are dozens of countries doing just fine, no matter what Rush (PBUH) and his bobbleheads say.

        • Jeff Jones

          Both of those countries you cite have healthy levels of debt (35% of GDP or lower).

          And once again, you totally ignore the ever growing private healthcare systems there.

          Add to all of that, our ignorance of the inconvenient (for you) fact that 100% of their citizens pay income tax…not 50% like the indefensible system you on the left defend here.

          • bpuharic

            So countries go bankrupt

            except when they don’t.You just admitted their debts are healthy

            IN SPITE of the govt healhtcare

            Do you read what you write?

          • Jeff Jones

            I admitted nothing. Your kool aid-addled cranium read what you wanted to hear and ignored the rest.

            You want single-payer (yeah right)? Fix it so half the country is paying more into the system than just sales and property tax. That’s how it is in the countries you cite, and single-payer doesn’t even work there. If it did, private healthcare wouldn’t stand a chance. It’s growing there and you refuse to acknowledge that fact because it lays waste to your obsolete narrative.

          • bpuharic

            If it’s so inefficient

            why is ours the most expensive in the world? Guess you forgot that data point?

            Private healthcare DOESN’t stand a chance because that’s the ONLY thing we have and it’s a failure.

            You say it’s ‘growing’?

            Great. Then they can be a failure like we are. You’re engaged in special pleading here…just wait 3 or 4 centuries and they’ll go bankrupt!

            Of course

            WE NEARLY WENT BANKRUPT TOO

            So let’s see

            1. you admit those societies have less debt than we do

            2. you ignore the fact we nearly went bankrupt

            3. you engage in special pleading so that we should wait for….oh however long it takes…for them to do what we already do

            4. you ignore we have the most expensive healthcare in the world

            Some argument you have there

          • Jeff Jones

            Like clockwork, you ignored the most important part of my comment. Are you willing to make every citizen pay income tax, because that’s the only way single payer works in those countries without massive borrowing. And don’t even attempt to claim they don’t ration care, because they do. At least in a private system a person has the freedom to drive their career forward and improve their care…but you don’t buy into the equality of opportunity idea, I know. Anything less than equality of outcome is anathema to you, even though no government has been able to do that since the beginning of time.

          • bpuharic

            If there was a Nobel prize for right wing cliches, youi’d win.

            “Drive their careers forward”

            The US has the WORST social mobility of any country in the western world. Your response?

            Cliche.

            I believe everyone is created equal which is why healthcare is a right.

            Ration care? We kill the poor. HOw is that ‘rationing’? Why does a 93 year old terminal cancer patient get better care than a 6 year old asthma patient merely because she can pay?

            ANy other cliches you want to pop on us?

          • Jeff Jones

            > The US has the WORST social mobility of any country in the western world. Your response?

            I don’t buy it. The social welfare states of Europe have had chronic unemployment for decades.

            > I believe everyone is created equal which is why healthcare is a right.

            Except for due process of law, I don’t see anything in our constitution that says you can get something. I like it that way.

            > Why does a 93 year old terminal cancer patient get better care than a 6 year old asthma patient merely because she can pay?

            Again, do you really think that is ever going to change? THAT is why there are private clinics showing up in Canada and the UK, two countries you claim have better care (another unsubstantiated liberal cliche I don’t buy). Even if you implement single-payer, there will still be doctors who take cash, because we have a republic and they can always go to states that allow cash transactions.

            Like I said to you before, if you liberals screw up our healthcare system any more, I won’t hesitate to pay for MDVIP care, because I can. And, if you try to outlaw it, as in Canada, certain states won’t enforce it…JUST LIKE IN PARTS OF CANADA. And, what is the federal government going to do then? Roll tanks down our streets because doctors are taking cash? Uh huh.

          • bpuharic

            I’m uninterested in your bed time fantasies. If you’re not adult enough to challenge your beliefs with facts, then you deserve to BE right wing because that’s the DEFINITION of a right winger.

          • Jeff Jones

            > If you’re not adult enough to challenge your beliefs

            …says the half-wit who responds to 75% of all posts with vague references to “Rush (PBUH),” which pushes the envelope of juvenile responses into skinhead territory.

          • bpuharic

            What can I say. The American right, which is the most extreme in a century, is an intellectual cesspool where Ayn Rand is considered a great thinker

            Res Ipsa Loquitur.

          • Jeff Jones
          • bpuharic

            By the way, explain this:

            The US has the most expensive healthcare in the world

            dead crickets….

          • Jeff Jones

            > The US has the most expensive healthcare in the world

            Not for long it would seem.

            Only losers want other people to pay for their own lack of initiative.

          • bpuharic

            More Rush (PBUH) cliches. TO the right wing the middle class is a bunch of failures and must be destroyed. They hate America, hate the people who made this country great

            The right wing gives welfare to the rich and attacks the poor, calling them losers.

          • Jeff Jones

            I call people like you losers. Your policies have led to Detroit, south Chicago, all of California, the unaffordable care act, Pigford, the IRS scandals, and on and on. And all you can come up with is the 2008 financial crisis, which your sniveling bureaucrats had their hands all over.

            Your policies generate people who depend on handouts. We cannot blame them for accepting what you losers give them so they’ll vote for your party.

            The detroits of the world are not lost on the next generation, by the way.

          • bpuharic

            Hmmm…we just had the biggest recession in 80 years thanks to right wing economics. 19 Trillion in equity lost. 8 M jobs lost thanks to supply side bankrolling of the rich.

            Your policies generate wealthy people who gamble with money then come to the middle class for a bailout, AKA upper class welfare.

            Your policies are responsible for the depression we went through.

          • Jeff Jones

            > Your policies generate wealthy people who gamble with money then come to the middle class for a bailout

            As if anything that huge could have happened without government bureaucrat involvement.

            > Your policies are responsible for the depression we went through.

            Assuming that were true, which it isn’t, the key words there would be “went through.” Depressions are temporary. The rot that your redistributionist policies have created for minorities is permanent, at least until much more qualified people take over. Eventually minorities will realize that. If not, another downgrade and its accompanying austerity will enlighten them to your party’s real motives.

          • bpuharic

            Dontcha love the Rush (PBUH) bots? It’s GOT to be the gummint! It’s the GUMMINT!

            Of course, as Brooksley Born pointed out, this happened AFTER we got the govt OUT of regulating banks.

            But the right doesn’t let facts stand in the way of a good cliche!

            Let’s see…he wants to blame the ‘darkies’.

            The hundreds of billions in welfare to the rich?

            Well, they’re white, you see…

  • Corlyss

    “the ACA completely reverses the status quo of the insurance industry: under Obamacare, the riskier patients pay less.”

    Of course it does! It’s a government program. It doesn’t have to make good, rational, or business sense. It has to please the largest voter bloc, i.e., greedy geezers.

    • bpuharic

      And under our current, most expensive in the world system, the old geezers get treatment

      The sick kid whose parents don’t have health insurance gets a funeral.

      Nice system conservatives are defending

  • Jim__L

    The GOP needs to defund these subsidies.

    We can’t afford the entitlements we have. Adding more is a mistake. We can’t keep the promises we’ve made. Making more is a mistake.

    • bpuharic

      We could stop agribusiness subsidies, the carried interest deduction and other welfare for the rich

      But the right would NEVER go for that….

      • Jim__L

        You might be surprised how much support you’d find for that among Republican voters, and how little you’d find on the part of Democrats who hold office.

        You might also be surprised how little difference those would make in our overall budget, compared to real reforms of our entitlement state.

        By the way, could you describe how the carried interest deduction works? Is that when you only have to pay taxes on income that actually passes into your hands as real money?

        • bpuharic

          Folks, you can’t make this stuff up.

          The GOP controls the House.

          They just passed a HUGE pork barrel agrbusiness subsidy giving BILLIONS to billionaires while eliminating food stamps for the poor. Guess that shows how much they want to cut subsidies

          And if you don’t know about how the GOP bankrolls the rich, you shouldn’t be playing with terms like ‘carried interest deduction’.

          • Jim__L

            I’m interested in hearing you describe the Carried Interest Deduction. Describe, not just excoriate.

            We spend billions on pork, it’s true. But we spend a couple trillion on entitlements.

            Cutting a couple billion here and there can be important in principle, but cutting several hundred billion is what it will take to make a difference in practice.

            Increasing our entitlement expenditures by numbers with nine digits is what Obama is all about, and that’s a criminal act against those of us who are going to be on the hook to pay it off.

          • bpuharic

            “Carried interest” is taxed at a lower rate because rich people…like Mitt Romney who earned his millions..wanted it that way. They don’t work for a living because if they DID their income would be taxed as EARNED income like middle class people. In fact, Paul Ryan has proposed doing away with ALL capital gains taxes (except those from 401k’s) precisely because the rich are on welfare, courtesy of the right

            I have no objection to food stamps and welfare. Those are protections for the middle class.

            But the rich haven’t earned a lower tax rate than I have and there’s NO reason why the right thinks I have to give welfare to the rich.