Will Millennials Buy into Obamacare Exchanges
NEW YORK ( MainStreet) Will the Millennial Generation buy into the Obamacare insurance exchanges? It is a legitimate - and crucial - question. The viability of Obamacare may depend on it.
But some people say the Millennials, the 18 to 34 age cohort, will not participate in the Affordable Care Act scheme. One such person is David Hogberg, Ph. D., a healthcare policy analyst for the National Center for Public Policy Research, a D.C. think tank. He recently prepared a study in which he laid out the proposition that the Millennials have no reason to join.
"If the ObamaCare health insurance exchanges are to function properly, it is crucial that a substantial number of people ages 18-34 join them," Hogberg wrote. "This age group that is young and relatively healthy must purchase health insurance on the exchanges in order to "cross-subsidize" people who are older and sicker. Without the young and healthy, the exchanges will enter a 'death spiral' where only the older and sicker participate and price of insurance premiums will increase precipitously."
But he says that his study found that in 2014 the Millennials who are single and do not have kids will have hefty incentives to not bother with the insurance exchanges and pay the individual mandate penalty of $95 or 1% of income. He calculates that 3.7 million of them will make out at least $500 better if they do so and 3 million will be $1,000 ahead of the game.
If Hogberg is correct then there will not be sufficient young and healthy people participating in the Obamacare scheme. This throws a monkey wrench into everything.
What would happen if this demographic opts to pay the penalty? What will be the reaction of the federal government? How will the feds change the rules to compensate for the loss of premium?
"There are four basic things the Obama Administration could do," Hogberg replied. "It could increase the premium subsidies, increase the penalty, loosen the age-rating band from 3-to-1 to, say, 5-to-1, or some combination of those three."
"The law doesn't give the Administration the authority to do those," he added. "But given its track recordsuch as suspending the employer mandateyou can't rule any of those out."
Another point that Hogberg addressed was the status of the money collected from the penalties. What will happen to the penalty money collected from those who do not join? Is there a way to estimate the dollar amount? He does not know the answer to either question.
"The reason is that it's not clear to what extent the IRS will be able to enforce the penalty," he said.