Читать книгу Disinherited - Diana Furchtgott-Roth - Страница 11
ОглавлениеPAYING FOR PARENTS’ HEALTH CARE
In 2010 Washington passed the Patient Protection and Affordable Care Act, which raised the cost of health insurance for the young and required them to subsidize older Americans. It also increased the cost of hiring, contributing to the slowdown in employment growth that is throwing major roadblocks in the way of young people’s careers.
The Affordable Care Act is a sweeping overhaul of America’s healthcare system that requires nearly everyone to sign up for health insurance and also tells them what kind of insurance they must buy. The law has helped some uninsured people obtain coverage. But millions of Americans have also seen their health-insurance plans canceled, because the plans did not meet the requirements of the ACA, or their plans have become more costly to pay for the roster of newly added benefits. It has enmeshed many in a bureaucratic nightmare.
Tommy Groves, a young professional working at a small firm in Washington, D.C., was one of the nearly 5 million Americans to receive a termination-of-coverage letter in October 2013 from his health-insurance provider, because his previous plan did not comply with the ACA’s requirements. While about half the states offered to extend cancelled plans for another year, later increased to two years, the District of Columbia required its residents to get new insurance.
Tommy’s employer gives him a set amount each month to cover his health-care premium. Extra money is directed to a health savings account, whose tax-free funds he can use to cover future medical expenses. Because of this system, common to many small businesses, 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 obvious, 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.
In December, Tommy did just that. He still had not heard back at the beginning of January 2014, the date by which he was supposed to be signed up. This deadline was later extended to March 31, 2014. After many phone calls and countless hours on hold over a period of weeks, and despite multiple assurances to the contrary, Tommy was informed at the beginning of February that his paper application had been lost. Finally, in March, close to the March 31 deadline for purchasing health insurance, 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. Finally, after hours more on the phone with D.C. Health Link over an additional series of weeks, the online system was able to verify his identity, and he met the deadline for purchasing health insurance to begin March 1, although D.C. Health Link refused to let him backdate the coverage to January 1.
Aside from the problem of a government agency’s losing sensitive health and identity information, Tommy faced another difficulty. In January, while he was still not enrolled in the exchange, he needed a minor medical procedure. He thought it would be only fair that this expense should be deducted from his new plan’s deductible, especially because his health-insurance provider would remain the same under the new plan. This led to another bureaucratic nightmare in which he had to fight both D.C. Health Link and his health-insurance provider. D.C. Health Link tried to pass off the blame to his health-insurance provider, when those at D.C. Health Link were clearly at fault—it was the government that had failed to create a functioning site and that had lost his application, not the private insurance company.
“I don’t want everyone who is 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 tell 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, all while he was forced to spend tens of hours on the phone from the end of November to the end of March. And it took until September 2014, five months after he had signed up, for D.C. Health Link to show that he was enrolled.
Young people have no way out of this minefield. They can either buy expensive coverage for services they do not need, or they can pay a fine for refusing to buy insurance under the “individual mandate.” No matter which way young people turn, the ACA will take a toll on their pocketbooks.
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 law artificially holds down the premiums of older people and raises the price for the young. In order to pay for the health-care costs of older people, insurance companies had no choice but to pass those costs 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, the typical cost of insuring an 18-year-old was one-fifth that of a 64-year-old.1 Because older people are at a 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 the 64-year-old in most cases would be better able to afford the higher premiums.
Young people, therefore, not only 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.
In 2013, the White House set a goal that 40 percent of total enrollment in the ACA exchanges should consist of young people between the ages of 18 and 34.2 President Obama reached out to young people during the ACA open-enrollment period, appearing with youth-friendly comedian Zach Galifianakis on his parody Internet talk show Between Two Ferns to promote the law. Joanna Coles, the editor in chief of Cosmopolitan magazine, was invited to have lunch at the White House after she publicly declared that she would use her magazine to promote the ACA.
Some organizations have put out troubling advertisements for the ACA that seem to convey that young people care only about partying and sex. The Colorado Consumer Health Initiative and ProgressNow Colorado Education, for instance, released ads for the ACA targeted at young people.3 One showed a group of college-age men doing a keg stand; the text accompanying the image encouraged young men to get “brosurance.” A second ad showed a young woman holding her birth control pills while standing next to an attractive man; they were identified beneath their photo as “Susie & Nate, Hot to Trot.” The text on this ad was far more offensive than “brosurance.” It read: “OMG, he’s hot! Let’s hope he’s as easy to get as this birth control. My health insurance covers the pill, which means all I have to worry about is getting him between the covers. I got insurance. Now you can too. Thanks, Obamacare!”
Excluding free press by friendly reporters and celebrities, Washington has spent more than $700 million on a public-relations campaign dedicated to selling the ACA to young people.4 One social-media ad featured a young man wearing hipster glasses and plaid, zip-front onesie pajamas. He’s half-smiling and cradling a mug of hot chocolate in his hands. The caption read: “Wear pajamas. Drink hot chocolate. Talk about getting health insurance. #GetTalking.” (Bold in original.) At times it seemed as if Washington was making a bigger push to sell the law among young people than among its target beneficiaries. By the end of open enrollment in March 2014, 28 percent of enrollees were within the target age range of 18 to 34, even though this age group makes up around 40 percent of the uninsured population.5 Why should the government spend taxpayer dollars to convince people to purchase a product they are required to buy anyway?
Washington is targeting young people because the costs of their health insurance are high and the benefits they receive are low. They are generally healthy. People under 30 spend on average $600 a year on medical costs ($388 on medical services, $149 on drugs, and $62 on medical supplies).6 Yet with a silver plan, the average premium for a 27-year-old is $2,680, with an average deductible of $1,842. Premium subsidies would reduce the average premium to $671, but even so, a typical 27-year-old would have to spend $2,513 before getting any benefits.7 No rational person would want to buy such a product, which is why the government has to spend valuable taxpayer dollars to convince people to sign up. It would be more financially advantageous for young people to pay the fine and skip the coverage.
If only those who most need insurance, such as the elderly, actually buy it, then premiums rise for everyone. This price increase causes more young, healthy people, often called “young invincibles,” to drop health-insurance coverage. Only the sickest people will remain, costing the insurance companies even more per enrollee. As this happens, premiums will go even higher, leading to a vicious cycle known as a “death spiral.”
This problem can be mitigated if premiums are low enough to encourage healthy people to buy insurance. But, under the ACA, premiums for young people are anything but low. In 2014, 27-year-old males saw their premiums rise an average of 91 percent because of the law. In contrast, premiums for the average 64-year-old rose only 32 percent.8
When the ACA’s controversial risk corridors and reinsurance bands expire in 2017, premium rates are likely to spike even higher. This will drive even more young, healthy people out of the exchanges. In 2018, if federal subsidies for health insurance exceed half a percent of GDP, premium-subsidy payouts will be cut.9 Washington’s failure to make insurance more attractive to young people today means that the cost of even basic coverage will probably increase sharply in a few years. Insurance coverage at these steep rates will make sense only for those who expect to have high medical costs or risks.
While 91 percent is a major increase, premiums for young people have the potential to rise even more. After all, the law is only in its second year. As more of the law’s mandates go into effect in subsequent years, premiums could rise further. A survey of 17 major insurance companies estimated that the new law would lead to a 180 percent premium increase for young, healthy males.10
Jason Church, a retired Army officer who was injured in the line of duty, knows the difficulties young people face due to growing healthcare 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. Regardless, he sees what other young people are going through and cannot help but worry 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 over 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 current plans and are stuck shouldering the costs of ACA.”
Washington is loath to admit to young people that the health-care law is designed to force them to shoulder the costs of their parents’ health care. But the young, it seems, are not biting, as evidenced by their low enrollment rates. Only 28 percent of enrollees in the first enrollment period were between the ages of 18 and 34, well below President Obama’s 40 percent target.11
Not only will young people be paying higher premiums under the ACA, but they will also be forced to buy plans that cover health services they do not want or need. The ACA mandates that all plans available in the individual market offer an array of “essential health benefits,” which, in addition to contraceptive coverage, include maternity and newborn care, mental-health coverage, rehabilitative services, and pediatric care.12 The average 27-year-old is highly unlikely to require all of these benefits, yet the ACA requires people this age to pay for them nonetheless. Such mandates, though well-intentioned, drive up costs for young people, most of whom only need services such as periodic medical visits and catastrophic care in the unlikely case of a major accident.
Some 35-year-olds might be happy to have their insurance plan cover maternity care, but many twentysomethings—as well as people who have decided not to have children or who are beyond childbearing age—are unlikely to feel the same enthusiasm. It is unfair to ask young people and these other groups to subsidize the maternity care of middle-aged people, especially considering that middle-aged Americans saw the smallest premium increases from the law. Additionally, young singles typically have a lower household income than that of couples who have decided to have children.
Out of households in the top 5 percent of incomes, more than 80 percent are married-couple families. Only 4 percent are males living alone, and another 4 percent are females living alone. On the low end of the income scale, 17 percent of those in the lowest 20 percent of incomes are married-couple families, whereas 57 percent are either males or females living alone.13
By requiring all health-insurance plans to cover these benefits that Washington deems “essential,” the ACA also reduces competition in the insurance market, which has the dual effect of raising prices and reducing quality. Never mind that it is unlikely that unelected bureaucrats working for the Department of Health and Human Services will know what is best for individuals. The point of private insurance is for people to choose the plan that works best for them, not for other people to tell them what they can and cannot buy.
In a competitive market, health plans that offer maternity care and other specific benefits will endeavor to do so for a low cost relative to value; otherwise, customers will simply purchase plans that do not include those services and pay for those expenses out of pocket. But if everyone is mandated to buy coverage for maternity care, then insurance companies have less incentive to keep expenditures on maternity care down, and costs will rise for enrollees.14
Purchasing insurance through the ACA is more like buying electricity from your local electricity company than buying insurance. With electricity, as with other utilities, you have a set service at a set rate and the company’s profits are determined by the government. With life insurance, auto insurance, and home insurance, a variety of products are available and companies compete to sell them. With the ACA, it is the government that determines the products that are on offer. This is not true insurance.
An estimated 4 million people, many of whom are young, will pay the fine for failing to purchase approved health insurance in 2016.15 In 2014, the individual-mandate penalty was $95 per year (rising to $695 in 2016), or 1 percent of income if that amount is higher;16 the average monthly premium for the lowest-level “bronze plan” for a 27-year-old was $226.17 This means that young people with average annual health-care costs of $600 will pay more than $2,700 per year just for insurance premiums.18 So overpriced is insurance under the ACA that many would rather pay a fine and receive no coverage than buy the insurance.
