Young and Healthy Americans Spurn Obamacare

Barack Obama’s health law is in trouble because many young and healthy Americans won’t sign up.

Scene at a rally for health insurance reform in Pittsburgh, Pennsylvania, September 2, 2009
Scene at a rally for health insurance reform in Pittsburgh, Pennsylvania, September 2, 2009 (Organizing for America)

Shikha Dalmia writes at The Week that American president Barack Obama’s health reforms are unraveling.

UnitedHealthcare, the country’s largest insurer, has said it may need to pull out of the exchanges next year that were created under Obamacare.

The company expects a $425 million hit to its earnings, primarily due to mounting losses on the exchanges. “We cannot sustain these losses,” said the company’s boss, Stephen Hemsley.

Other insurers could follow. Some have already raised premiums by double digits to try to make end meets, but they still can’t make the numbers work.

Young and healthy stay uninsured

According to Dalmia, who is a senior policy analyst at Reason Foundation, the exchanges aren’t working because it are mainly the old and the ill who are signing up.

When the law was passed in 2010 — over unanimous Republican opposition — Democrats said 21 million more Americans would be insured by 2016 as a result of it.

The Obama Administration now admits that at most half that number is enrolling.

The reason for this pathetic take-up rate is that the lavish benefits — in-vitro fertilization for 50-year-old women, for example — that Obamacare mandated for qualifying plans have backfired.

Obamacare introduced minimum standards for insurance plans that were meant to prevent the young and healthy from only purchasing bare-bones insurance and thus failing to offset the costs of those who actually need care.

Critics of the law — including this blog — argued against mandating coverage of everything from ambulatory services and hospitalization to maternity care and rehabilitative services. It’s one thing for the government to mandate that people get insured; telling them exactly what they need to insure themselves against is an affront to independent-minded Americans.

In practical terms, it also makes insurance more expensive than it needs to be for many.

What happens is not that people listen to Uncle Sam and buy insurance even if they can’t really afford it nor think they need it. When health insurance is already far more expensive in America than in other wealthy nations, what happens is that many simply decide to go without and risk the penalty.

This, in turn, is forcing insurers to raise prices even more, which is causing more healthy people to drop out, unleashing the dreaded adverse selection spiral.

What next?

Rather than admit defeat and start over, Hillary Clinton, assuming she succeeds Obama in 2016, would introduce price controls to fight the market’s logical reaction. And so one government intervention designed to “correct” a failure of the free market would naturally lead to the next: to correct the damage done by the first.

This blog has argued before that there is a better way: remove the impediments to free enterprise in health care, pharmaceuticals and insurance.

It should not be the state’s prerogative to decide who can practice medicine. Drug companies should not have to ask permission before putting a medicine on the market. Insurers should be able to operate across state lines and sell whatever insurance plans they want.

None of this was the case before Obamacare when half the health-care market was already dominated by Medicaid and Medicare, which finance health care for the poor and seniors, respectively.

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