The White House and its media allies have been cheerleading Obamacare’s apparent success at exceeding the president’s stated target for enrollments in the Obamacare health-insurance exchanges. Even more importantly, they have asserted that a significant proportion enrolled in the exchanges are young people. President Obama declared that 35 percent of enrollees are under the age of 35.
Enrolling enough young people into Obamacare was important because insurers are forbidden to charge applicants premiums commensurate with their health risks. Also, insurers are prohibited from charging older people premiums that exceed three times what they charge younger people. However, it would be more actuarially accurate for insurers to price the premiums of older people at more than six times the amount they charge young people.
So, the Obamacare exchanges need lots of young people paying premiums to subsidize the older people. Failure to recruit enough youngsters would condemn the exchange plans to higher medical claims, and necessitate a significant spike in premiums in 2015.
A previously stated goal was that 40 percent of enrollees be young. So, 35 percent looks close enough. However, President Obama’s victory statement is a piece of lawyerly evasion, as first identified by Glenn Kessler of the Washington Post.
“Under 35” includes children, and that is not who is needed in the exchanges. Most minors would have enrolled with their parents in a family health plan. They add very little to the premium of a family plan. The young people who are needed in the exchanges are the so-called “Young Invincibles,” adults from the ages of 18 through 34. This group makes up only 28 percent of enrollees in Obamacare — almost one third fewer than the 40 percent needed.
And even the Young Invincibles who signed up for coverage in Obamacare’s exchanges did not respond exactly as Obama’s re-engaged political machine had planned. Instead, a large share of them enrolled through a non-Obamacare website.
eHealth, Inc., a company that has operated an online marketplace for health insurance for over a decade, received permission to enroll people in Obamacare in the 36 states that have federally operated exchanges. Instead of going to the broken healthcare.gov website, applicants could apply at eHealthInsurance.com. eHealth, Inc. reported that from October through December, 39 percent of applicants for Obamacare coverage were between the ages of 18 through 34. For January through March, the proportion rose to 45 percent.
Obamacare’s recruitment outreach to young adults fell woefully short. And without help from a privately operated online broker, it would have been even worse.
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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.