Is Obamacare Bad for the Young?

Published February 12, 2013

Is Obamacare bad for the young? In a short answer, yes — if “bad” means “forcing young people to buy more expensive health insurance than they need” is bad. And for most young, healthy people, that impact on your wallet isn’t viewed as good.

We already know that young people are in for sticker shock:

The survey, fielded by the conservative American Action Forum and made available to POLITICO, found that if the law’s insurance rules were in force, the premium for a relatively bare-bones policy for a 27-year-old male nonsmoker on the individual market would be nearly 190 percent higher.

The insurers estimated that a healthy 27-year-old man in Austin, Texas, who pays $54 a month for insurance this year would have a $153 premium if Obamacare’s market regulations were in effect.

The pressure would be the opposite but more modest for top-tier plans covering an older, unhealthy woman in Austin. Her premium would drop by 40 percent, they estimated.

But the sharp increase for some is going to make it “hard to declare victory,” said Douglas Holtz-Eakin, president of the American Action Forum and a persistent critic of the health law.

The Obama administration should “be very, very, very afraid,” he said. The country was “told it was going to make health care cheaper.”

But Matthew Yglesias argues this misses the point.  He suggests young people are only helped by Obamacare, because eventually they will be old people:

The primary flaw in Smith’s analysis, however, is that obviously today’s young people will be tomorrow’s old people. So even if the existing under-35 cohort has relatively few health care problems right now, it’s still in our interests to set up a system that will provide for future needs.

Michael Cannon responds.

But Matt Yglesias takes the cake. ObamaCare does not screw the young, he writes. Sure, millions of young adults will pay more for health insurance, even after accounting for ObamaCare’s subsidies. But young adults shouldn’t sweat the triple-digit premium hikes ObamaCare forces them to pay solely for the benefit of subsidizing older people who have more resources than they do. Why? Because today’s young adults will benefit later when ObamaCare does the same for them at the expense of subsequent generations. You know, if they don’t die first. What could go wrong?  

Social scientists have a term to describe the role that people like Yglesias play in a confidence game. It’s called “cooling out the mark.”

The real problem with Obamacare is that it forces many people to buy a product they do not need paying prices higher than what they should to fund other products for other people. This is the definition of warping a marketplace with hidden costs, and the consequences are decidedly negative for those who need the product the least.