Obamacare: Bad for Young Americans
Higher Health Insurance Premiums. The health care takeover[i] states that insurance carriers cannot vary premiums solely based upon family structure, geography, and age; insurance companies also cannot vary premiums by age by more than 3 to 1 (i.e., charge older individuals more than three times the premiums paid by younger applicants). Average premiums for individuals aged 18-24 are nearly one-quarter the average premiums paid by individuals aged 60-64.[ii] While supporting initiatives (such as state-based high-risk pools) that would provide affordable coverage to those with pre-existing conditions, the very narrow age variations allowed function as a significant transfer of wealth from younger to older Americans—and by raising premiums for young and healthy individuals, may discourage their purchase of insurance.
Higher Taxes for Those Who Cannot Afford Coverage. The health care takeover imposes a 2.5 percent tax on the income of all individuals who cannot afford to purchase a “government-approved” policy—that is, one that meets all the new federal mandates and regulations imposed in the legislation. Particularly given the higher premiums that will be imposed on young people for the reasons described above, some may agree with then-Senator Obama when he pointed out that in Massachusetts, the one state with an individual mandate, “there are people who are paying fines and still can’t afford [health insurance], so now they’re worse off than they were. They don’t have health insurance and they’re paying a fine.”[iii]
Tax on Jobs Will Hurt Young Workers. The health care takeover imposes a new tax on jobs by forcing employers who do not provide “acceptable” coverage to pay a “fair share” tax of $2,000 per full-time employee—nearly triple the $750 tax initially proposed. Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers will be “at substantial risk of unemployment” due to new mandates on employers.[iv] The Congressional Budget Office has also confirmed that such mandates “could reduce the hiring of low-wage workers,” and could lead to wage stagnation as compensation is diverted to comply with new federal mandates.[v] At a time when more than one in four teens is unemployed,[vi] these harmful tax increases will hurt exactly the workers that a health care bill is intended to help.
Marriage Penalty. The health care takeover bases health insurance subsidy thresholds on multiples of the federal poverty level, and because the poverty level for a two-person couple ($14,570) is less than twice the poverty standard for a single person ($10,830),[vii] couples who marry will see their eligibility for subsidies automatically decline when compared to two cohabiting individuals. Many may view this policy as providing perverse incentives for couples not to marry.
Rising Debt a Fiscal Time Bomb for Future Generations. The health care takeover spends $2.6 trillion in its first 10 years of full implementation—and the President’s budget proposes to address Medicare physician reimbursements through an additional $371 billion in new deficit spending not included in the legislation.[viii] Growing the problem by adding trillions more of federal spending will only increase the debt burden to be faced by future generations.
[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.
[ii] America’s Health Insurance Plans, survey of individual health insurance products, December 2007, http://www.ahipresearch.org/pdfs/Individual_Market_Survey_December_2007.pdf, Table 2, p. 7.
[iii] Democratic presidential debate in Austin, Texas, February 21, 2008, transcript available at http://www.cnn.com/2008/POLITICS/02/21/debate.transcript/index.html.
[iv] Kate Baicker and Helen Levy, “Employer Health Insurance Mandates and the Risk of Unemployment,” NBER Working Paper 13528, October 2007, http://www.nber.org/papers/w13528.pdf.
[v] Congressional Budget Office, “Effects of Changes to the Health Insurance System on Labor Markets,” July 13, 2009, http://www.cbo.gov/ftpdocs/104xx/doc10435/07-13-HealthCareAndLaborMarkets.pdf
[vi] Bureau of Labor Statistics, “The Employment Situation – February 2010,” http://www.bls.gov/news.release/pdf/empsit.pdf
[vii] Department of Health and Human Services 2009 Federal Poverty Level guidelines, http://aspe.hhs.gov/poverty/09poverty.shtml.
[viii] President’s Fiscal Year 2011 Budget Submission to Congress, February 2010, http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf, Table S-7, p. 162.