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.