Younger People Should Not Be Forced To Subsidize the Health Coverage of Older People
An issue receiving some attention recently has been the age-related rate restriction in Obamacare. Under the law, starting in 2014, health insurers may charge older people no more than three times higher premiums than they charge younger people.
But restricting how much insurers can charge older people does not remove the higher costs associated with covering such individuals. For example, 64-year-olds tend to have six times higher health care costs than 18-year-olds. If insurers can’t charge older people according to their risk, this means they have to make up those costs by charging higher premiums to younger people. A new study estimates that once Obamacare’s various rate restrictions and other provisions kick in, 27-year-old non-smoking males may see premiums rise, on average, by up to 190%, while 55-year-old women who smoke may see their premiums fall, on average, by almost 20%.
There’s been much debate about whether this subsidization from the young to the old is proper. Matthew Yglesias of Slate says that “today’s young people will be tomorrow’s old people,” so while this system may not be good for young people right now, they will eventually benefit from it. A senior official at the AARP echoed this sentiment, saying, “If a younger, healthier person is spending a little more now, it’s okay because at some point they’re going to be a less healthy, older person too.”
There’d be nothing politically objectionable with such an arrangement if it were voluntary—if the individuals in it decided this was the arrangement they wanted to be in, and if they came to think differently, they were free to leave.
But in today’s health care system, this arrangement is not a choice. If you buy insurance, the government forces younger and healthier people to subsidize the health coverage of older and unhealthier people—and this has gone on long before Obamacare. The only alternative has been to forego carrying an insurance policy, which starting next year, Obamacare will make illegal.
The fact that these kinds of provisions are coercive is too often left out of the conversation. If a 27-year-old decides that he does not want to shell out higher premiums in order to subsidize those older than he, if he’d rather purchase a policy from an insurer willing to charge him according to his own risk and use the money left over for his own purposes—such as saving for a down payment on a home or buying a new computer—can he exercise that choice under Obamacare? If he does, he is breaking the law and will be punished accordingly.
It’s not the purpose of government to conscript people into such schemes. Individuals should be left free to act on their best judgment. If an insurer is willing to charge a young and healthy person a low premium and that person wants to buy the coverage offered, by what right does the government ban that trade and force him to enter another arrangement? This is the question we should be asking when thinking about rate restrictions and other such controls in Obamacare.