Young Invincibles Shying Away from Obamacare
According to demographics data from the latest Department of Health and Human Services report, of the 2.2million people who chose insurance plans over the federal and state exchanges, only 24% were between the ages of 18 and 34. Once the deadline for enrollment ends on March 31st this could have consequences on consumers who could face higher insurance rates in 2015, according to experts.
The higher insurance rates would come about from insurance companies failing to find sufficient young and healthy people willing to offset the costs of covering older and sicker Americans. It’s not clear yet how the final breakdown of the people who buy insurance will impact rates. Some insurers may have set rates with a more pessimistic outlook, expecting a smaller share of young people to sign up for coverage, while other insurers may have expected a larger share of young adults to sign up.
One estimate from the Kaiser Family Foundation found that about 40% of the people expected to enroll in insurance plans would comprise of “young invincibles,” which is significantly higher than the dismal 24% we’ve seen so far. However, with a little more than two months left in the open enrollment period, the mix of people who sign up can still change.
Not surprisingly, most of the young people who signed up did so during December, when the exchanges started working better and as the deadline approached for choosing plans that would be effective by Jan. 1. The number of 18 to 34 year olds signing up through HealthCare.gov during December was eight times as many as in October and November.
Another reason for the low youth signups may be that young people are simply opting not to sign up for ACA coverage. According to a study released on Tuesday from the conservative American Action Forum, the individual mandate penalty may never be substantial enough an incentive to get young adults to buy into the Obamacare exchanges. The study finds that after accounting for cost-sharing and subsidies in 2014, it would still be cheaper for 86 percent of young adults to forgo coverage and to pay the individual mandate instead. That percentage decreases to 71 in 2015, and 62 in 2016, as the individual mandate penalty goes up.