Obamacare vs. The Young

During his State of the Union address, President Barack Obama contended that "already the Affordable Care Act is helping to slow the growth of health care costs." Yet the costs of health insurance continue to climb, a direct consequence of the Affordable Care Act, and many uninsured Americans are likely to remain that way.

Health insurers are pushing double-digit premium increases, some as high as 26 percent. Next year, when the Affordable Care Act's requirement to have insurance takes effect, premiums are expected to rise further, and many young Americans will have to choose between buying health insurance or paying a penalty. Although proponents of the law argue that subsidies will entice younger people to buy insurance, it actually is expected to have the inverse effect. Subsidies are too small, and out-of-pocket costs for insurance are much higher.For many young Americans, it makes more sense – although it has negative impacts on the overall health care system – to wait until they are very sick to purchase insurance, since they can't be denied coverage due to a pre-existing condition – or to seek to qualify for so-called "free" insurance, such as Medicaid (called Medi-Cal in California).

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And the penalty alternative is so much less expensive than the cost of health insurance that the majority of people purchasing insurance figure to be older and less healthy. Younger Americans won't want – or won't be able to afford – to spend so much on health care. It will be young, healthy Americans, therefore, who will tend to become the losers.

"If young adults can't afford health insurance policies available in 2014 under the health care law, state insurance officials are worried they won't buy them. And that could drive up the cost of insurance for the mostly older, sicker people who do purchase coverage," notes Kaiser Health News, published by a foundation related to the large health insurer Kaiser Permanente.

Higher payroll taxes and taxes on medical devices have now been implemented – yet President Obama wants more "modest" reforms. "Obamacare distorts the marketplace," Joel Hay told us; he's a health economist at the USC Schaeffer Center for Health Policy and Economics. "It takes a broken system and pours gasoline on the fire."

Health expenditures in the United States in 2010 were estimated at $2.6 trillion – more than 10 times the $256 billion spent on health care in 1980. The U.S. spends $7,000 per person, 16 percent of gross domestic product, on health care every year. Yet Americans have a life expectancy slightly below average compared with countries that make up the 30 democracies in the Organization for Economic Cooperation and Development, despite spending more than any other OECD nation.

Ultimately, one of the major root causes of health care inflation is the lack of competition in medical services. Obamacare, looking like another runaway entitlement program, fails to keep those costs down while pushing Americans in the direction of a government-run system, largely due to skyrocketing premiums for private insurance. And many of those who should be buying insurance at affordable rates in the event of an emergency – young and generally healthy Americans – will be unable or unwilling to do so.

by ORANGE COUNTY REGISTER