Oral Presentation: The Individual Mandate and Young

Oral Presentation: The Individual Mandate and Young People

One of the reasons that the 'individual mandate' was such a critical component of the Affordable Care Act -- the mandate requiring all Americans to have health insurance -- was that it was designed to encourage younger, healthier people to sign up for insurance rather than pay a penalty. It was deemed essential to have healthier people with fewer health complaints in the insurance 'risk pool' to ensure that healthcare costs in America did not spiral out of control. This paper will examine this specific aspect of healthcare reform and to attempt to understand firstly if this is true (if increasing the number of young people signing up for healthcare will reduce costs overall) and how the government has attempted to encourage young people to sign up for such insurance.

Young people are thought to be "a group avidly sought by insurers because they are usually healthier and need fewer costly medical services" (Pear 2014). However, they are also often called 'young invincibles' because many believe they simply do not need health insurance because they are healthy. Ultimately, many cost the system more in the long run when they do fall ill. Today "almost 13 million of them account for more than 27% of non-elderly uninsured persons in the United States, and close to half of uninsured young people have a hard time paying medical bills. Each year, young adults account for nearly a quarter of the 129 million emergency room visits in the United States, second only to persons over the age of 75, according to the U.S. Department of Health and Human Services" (Kagan 2014). However, while this may be an argument not to feel invincible, it is also an argument that healthcare costs may not go down in the United States. Young people get into more car accidents, have higher rates of depression, and take more risks than their middle-aged counterparts. So having more young people sign up for healthcare is not in and of itself a panacea.

There is still resistance amongst many of the young to signing up and many are willing to pay the relatively small penalty for noncompliance rather than assuming the greater costs of health insurance. Rates on a whole have gone up, not down, under Obamacare (although its proponents argue that is because people are being provided with more comprehensive coverage). "Many 27-year-olds will face steep increases in the underlying cost of individually-purchased insurance under Obamacare. For the states where we have data -- the 36 reported by HHS [Health and Human Services], plus nine others that we had compiled for our map that HHS didn't report -- rates will go up for men by an average of 97%; for women, 55%"(Roy, 2013, Double down Obamacare). Low cost catastrophic plans have been eliminated because of the increased requirements placed upon healthcare plans to offer comprehensive coverage.

The high costs of insurance may result in fewer healthy people seeking out health insurance -- conversely, individuals with severe health conditions may be able to purchase health insurance now, because they were previously unable to do so because of preexisting conditions. Thus the fear is that over the long-term the proposed savings that should result from extending insurance my not be realized. Furthermore, many healthy young people may be exempt because of the 'hardship clause' of the ACA: "the Centers for Medicare and Medicaid Services announced that Americans who have had their plans canceled will be exempt from enrolling in the exchanges, because some consumers were finding other coverage options to be more expensive than their cancelled plans or policies" (Roy, 2013, Utter chaos). There is also a hardship exemption for individuals whose spending on a premium would exceed a certain percentage of their salaries. "This new hardship exemption will encourage healthier individuals, whose expected spending would be low, to drop out of the pool. As a result, average spending per enrollee on the exchanges is likely to be substantially higher than the insurers had planned for, forcing them to lose money on their policies" and to raise the cost of health insurance for all (Roy, 2013, Utter chaos).

This is significant for corporations given that they must be mindful of escalating healthcare costs. It should also be noted under the law that larger organizations are required to provide coverage for their employees: "Employers with over 50 employees that do not provide insurance must pay a penalty of $2,000 for every employee in the company if even one employee opts to obtain insurance through an exchange" (Health care reform, 2014, Monster). Also, "employers with more than 50 employees that do provide insurance must pay a penalty if any of their employees obtain a subsidy to help pay for insurance" (Health care reform, 2014, Monster). Providing well-structured health insurance programs is a necessity for employers to ensure legal compliance. It is possible the ACA would help employers who currently offer employees health insurance by expanding the number of healthy as well as sick individuals in the risk pool which should reduce costs but again that prospect is controversial.