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December 7, 2013
Viewpoints: The 'young invincibles' skip health insurance

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(Dec. 7 - by Akhilesh Pathipati, Special to The Bee)

While recently catching up on episodes of "Parks and Recreation," the commercial breaks caught my attention. All three advertised Covered California, the state's health insurance exchange under the Affordable Care Act. As a young adult, I was both the show's and the commercial's target audience. Young people like me are the linchpin to making health care reform successful.

Obamacare has had its share of well-publicized struggles, but it's only a matter of time before the website glitches are gone. A more fundamental concern is whether the law can attract young, healthy adults - the so-called "young invincibles" - into the insurance exchanges.

The Affordable Care Act's individual mandate obliges everyone to have insurance or pay a tax penalty. To facilitate the process, the government set up a marketplace where uninsured individuals can purchase a plan. All of the plans in the exchanges must meet minimum benchmarks, which ensures that they do not discriminate against people with pre-existing conditions.

The underlying foundation of the exchanges is the young, healthy demographic - people who are far less likely to access health care. Thus, our premiums subsidize others who do require care.

But what happens if the young invincibles cannot afford health insurance or think they don't need it? Without young and healthy people paying into the insurance risk pool, people who need more care skew costs higher for insurers. Eventually, more gets paid out than gets paid in so premiums rise, and the system falls apart.

The flaw in an otherwise straightforward design is a weak individual mandate, combined with expensive health care. While the Affordable Care Act provides subsidies designed to ensure that insurance is "affordable," affordable means different things to different people.

Suppose a young man earns $40,000 a year and needs to buy insurance in the exchanges. He would probably lean toward the cheapest bronze plans, which only cover 60 percent of expenses but still cost about $3,000. By contrast, opting out would only cost him a $300 tax penalty. The tax will go up in subsequent years, but will remain substantially lower than buying insurance. Most young invincibles who pass on insurance want it, but they must balance the probability of racking up medical bills in the thousands - relatively unlikely - with their economic realities.

Covered California's enrollment numbers have borne out fears that fewer young people have joined the exchanges than are needed to support the insurance pool. The state reports that 18- to 34-year-olds account for 23percent of enrollees. But they represent approximately 33percent of the people who could enroll. On the other hand, 56percent of enrollees were from the 45- to 64-year-old demographic.

The takeaway is that young people are underrepresented while older adults, who need more care, are substantially overrepresented in the exchanges. Perhaps more worrisome, data from other states show worse trends; California has been the most successful state.

So how to make young people enroll? Unfortunately, there is no easy solution.

Exchange administrators across the country have placed their faith in ad campaigns. Governments and other organizations have spent hundreds of millions on TV, radio and social media outreach. Colorado, for example, has received attention for "got insurance" ads, which use provocative topics like sex and alcohol to generate publicity.

Yet in talking about health reform with my peers, the conversation rarely revolves around a lack of information. Those that have insurance through an employer or their parents focus on the political rhetoric of reform: Liberals list Obamacare's merits while conservatives condemn its faults.

But for many young people who do not have insurance and need to buy it in the exchanges, the prevailing sentiment is one of frustration. While the Affordable Care Act has some provisions to help reduce costs, it ultimately requires healthy people to subsidize sick people. It's difficult enough to start a career, save for the future and pay our own bills; the new law asks us to subsidize our parents' insurance bill as well. Whether or not it could work in practice, it's a difficult concept to embrace.

Health care reform's first priority should be to reduce costs to make care more affordable rather than redistributing costs to young people. In the meantime, the only way to ensure the participation of the young invincibles is to strengthen the mandate by making the opt-out tax as costly as buying insurance.

This is hardly a perfect solution; it forces an economic burden on young adults and introduces another round of political posturing. Granted, some people have chosen to enroll and more may do so. But until health insurance is forcefully mandated, the success of the health exchanges must rely on speculation and hope.

Akhilesh Pathipati is a Stanford medical student who has worked on health initiatives in Massachusetts and California. He is a Sacramento native.



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