Young Adults Skip ObamaCare

Young Adults and ObamaCare

Source: web

Understanding Obamacare is one of the most difficult feats since Obama took office. Now, and whether it’s because they can’t wrap their minds around it or if they’re resentful about being forced into something they don’t believe in, young adults are rebelling against Obamacare.

ObamaCare Mandatory

The primary focus of the new health care reform is to ensure every American has health insurance. It was promised that it would also be affordable. Because it relies on the healthy population to balance out the payouts for those who are not healthy, it’s a huge blow to learn that younger Americans may not sign up and instead, opt for the fee on their annual tax returns.

Remember, the Affordable Care Act has a mandatory stipulation that citizens must sign up for health-care insurance by 2014 or face a fine. With more of us living healthier these days, those healthy folks who don’t use their healthcare often, but who will be paying for the insurance, was supposed to allow for lower premiums of older consumers or those will illnesses. Unfortunately, that might not happen. If it doesn’t, we’ll be adding one more black mark against the controversial reform.

Requires Credit Card?

Last week, it was learned some Americans would be running into road blocks while simply trying to pay their premiums. There’s a problem with the payment options. For those under or unbanked in the U.S. – and especially if they don’t have credit cards – are realizing that insurance companies may not be willing to work with them.

Worrisome Premium Increases

For some, that point is moot as a new survey reveals. Premiums will rise sharply in 2014 and it may (some prefer the word “will”) force Americans between the ages of 18 and 40 to pay the penalty to the government via their tax returns. The survey also found these statistics:

  • 83 percent of those who already have health insurance say they will continue their payments if their premiums don’t increase by more than 10 percent.
  • 65 percent will purchase it if premiums increase 20 percent.
  • 55 percent of consumers in this age group will purchase insurance if premiums increase 30 percent.

The president of the American Action Forum, which conducted the poll, said,

The design says that we will get young adults in the pool to subsidize care, but the poll finds that might not work.

Douglas Hotlz-Eakin also says that while young adults likely want to ensure their healthcare insurance is ample, too many of them will begin weighing the increased monthly premium to the penalty if they don’t pay. Most will discover paying the penalty is less than paying the premiums. There’s no incentive for them to carry insurance in those situations. But there’s another factor: insurance plans can be bought when they’re actually needed. This begs the question: why doesn’t everyone opt to pay the penalty and then pick up a policy if they feel as though they’re about to endure some medical problems?

Hotlz-Eakin also explained that it will be the taxpayers who will be forced to “subsidize cheap insurance for relatively expensive patients”. That, he says, won’t bode well for anyone.

Subsidies May Not Be Enough

A health-care policy expert at the Heritage Foundation agrees. He explains that even with subsidies for those making less than $89,000 annually, many – if not most – will still opt out. This is especially true in 2014 when those not in compliance will pay $95. After 2014, that price skyrockets to $695 or 2 percent of a taxpayer’s income. Still, with most policies costing more than $1,000 a year for those earning more than $18,000, you can see it’s still cheaper to pay the penalty.

Surprisingly, there are other factors we have to consider. One’s health and marital status could be driving forces in the decision making process. The younger you are, the less the odds are that you’re married or have children. As a result, there may not be an incentive to purchase the insurance. The justification is that if they’re going to have to pay, they might as well take the option that’s not going to cost as much. Many argue – and it’s a valid argument – that they never get sick. They resent other folks – specifically the government – going into their wallets and telling them where they’re going to spend their money.

They are also very likely to turn down employer coverage if they have to pay up to one-third of the premium. So from the very beginning, why would Obamacare jack up rates on the most price-sensitive segment of the market, and then try to bribe them with subsidies and penalize them with the mandate tax?,

Hotlz-Eakin reasoned. Obamacare was written to cover the ill and there were few considerations given to the proactive consumers.

Prevention is what you’d focus on with young and healthy people…This law hinges on the fact that young people will show up, but they have no incentive to do so.

There’s just no upside to the law for many. As the day draws nearer, we can expect to see many new debates, editorials and breaking news announcements. Ultimately, though, it’s going to either soar flawlessly or crash and burn – and whatever it does, it’s likely to be swift.

Finally – even if every American was opposed to the new law (of course, there are many who support the new healthcare program), there’s one group that’s eager to get the proverbial ball rolling. That group, of course, is the drug makers. The new regulations found in the Affordable Care Act that will cost drug makers tremendously in those earlier days; however, the pharmaceutical industry will also haul between “$10 billion and $35 billion in additional profits over the next decade,” according to analysts.

What are your thoughts? Will you be in compliance or have you decided it’s not going to benefit you and you’ll just pay the penalties instead? Share your thoughts with us – love it or hate it – let us hear from you. Leave us a comment or join the conversation on Facebook.


About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.

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