Friday, March 25, 2011

One Year Later: STILL Bad for Young People

Today the Administration continues to sell its unpopular health care law to younger Americans, hoping they will see its benefits.  In reality however, young people stand to lose, not gain, from the 2700-page measure:

Higher Health Insurance Premiums.  The law states that insurance carriers cannot charge older individuals more than three times the premiums paid by younger applicants – meaning premiums for the young will likely rise so premiums for older populations can fall.  A Rand Corporation analysis found that premiums for individuals under age 35 could rise by 17% due to this one mandate, while other analyses have even higher estimated premium impacts.  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 them from buying insurance at all.

Penalties for Those Who Cannot Afford Coverage.  The law imposes penalties on individuals who cannot afford to purchase a “government-approved” policy – one that meets all the new federal mandates and regulations imposed in the legislation.  As candidate Obama pointed out during his presidential campaign, 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.”

Employer Mandate Will Hurt Women and Young Workers.  The law penalizes employers who do not provide “acceptable” coverage, forcing them to pay a “fair share” penalty of $2,000 per full-time employee.  Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers would be “at substantial risk of unemployment” due to new mandates on employers.  What’s more, women and young adults “face the highest risk of losing their jobs under employer mandates.”  The Congressional Budget Office has also confirmed that such mandates “could reduce the hiring of low-wage workers,” and lead to wage stagnation as compensation is diverted to comply with new federal mandates.  At a time when nearly one in four teens is unemployed, these harmful tax increases will hurt exactly the workers that the law intends to help.

Marriage Penalty.  The law bases health insurance subsidy thresholds on multiples of the federal poverty level, and because the poverty level for a two-person couple ($14,710) is less than twice the poverty standard for a single person ($10,890), 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.  At a time of record budget deficits, the health law spends $2.6 trillion in its first 10 years of full implementation.  Growing the debt problem by adding trillions more of federal spending will only increase the debt burden to be faced by future generations.