Obamacare May Face Shortage of Young American Adults

Friday, 20 Sep 2013 08:39 AM

By John Morgan

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Obamacare is kind of like Apple – analysts are worried that the less expensive new iPhone could hurt sales of its more expensive flagship model, and the new federal health insurance plan may face a similar troubling issue, according to MarketWatch.

In order for it be a success, Obamacare needs young people to sign up for coverage on its federally mandated health exchanges. However, the more attractive (and cheaper) alternative in many cases is for people younger than 26 to stay under their parents' existing health plans — another provision of federal healthcare reform.

The problem, according to MarketWatch, is that if the exchanges set up under the Affordable Care Act (ACA) do not sign up enough young people, then they will have to raise rates for everyone.

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That's because sicker people who are likely to dominate the exchanges need to be balanced out by about 2 million to 3 million healthy younger Americans, estimates show.

"They're America's lost youth to the group plan world," said Bryce Williams, CEO of Towers Watson's ExtendHealth, an insurance marketplace that will participate in the exchanges.

The ACA "took several million young adults out of the exchange market, who actually could be handy to help subsidize older Americans," Williams explained.

Another ramification of Obamacare's provision that young adults are allowed to stay on their parents' plan is that it is apparently making private group plan coverage more expensive.

MarketWatch said some companies have raised the health insurance rates for all of their workers because of the additional cost of continuing to insure employees' adult children until age 26. For instance, Delta Airlines estimated the adult children provision costs the company about $14 million per year.

But Christina LaMontagne, vice president of price-comparison site NerdWallet, told CNBC it appears Obamacare rates for young people in some states will be so low that they will be enticed to sign up, especially when subsidies are factored in.

"Health insurance can be as affordable for young adults as their cell-phone bill," LaMontagne predicted. "We expect many young adults will find the monthly subsidized prices of $101 in California or $114 in New York affordable."

The Washington Post reported new polls show Americans are "very, very confused" about Obamacare.

Results of a Wall Street Journal/NBC News Poll found that, among the uninsured, 76 percent did not understand the ACA and how it would affect them, and only 32 percent of the uninsured said they were "fairly likely" or "very likely" to sign up for the exchanges.

Editor’s Note: Add Up to $152,046 to Your Social Security Benefits Using Weird Trick

Related Stories:

Obamacare's Success Depends on Young Buyers

Low Prices Seen Luring Young Adults to Obamacare, Study Finds

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