Sir Alexander Arnold Constantine Issigonis, a car designer who famously devised the Mini, once said: “A camel is a horse designed by a committee.” The quote largely sums up Obamacare – a misshapen amalgam of oft-contradictory provisions assembled, seemingly haphazardly, to try and please everyone. In so doing it should please absolutely no one.
The clearest, and yet also most muddled, example of this is Obamacare’s treatment of the young. The designers of Obamacare knew that they had to please the AARP, in no small part because they were implementing enormous rate reductions in Medicare to make the bill appear budget neutral. Their chosen method was to condense the age bands that insurers were allowed to charge to different beneficiaries.
What that means is that young people are, on average, much healthier than older people and are thus much cheaper to insure. In fact, the average young person only cost about one-sixth of what it costs to insure the typical 64-year-old. Prior to Obamacare insurers were allowed to “experience rate” their customers – i.e. charge them based on the amount of health care they should be expected to consume. After Obamacare, insurers are only allowed to charge their most expensive beneficiaries three times what they charge their least costly ones. The result is that insurance premiums for young folks go up dramatically and insurance premiums for older Americans go down modestly.
If that’s where things ended then fine, it would be a poor policy decision, but at least one with an understandable rationale. But things don’t end there. As Avik Roy explains in Forbes:
What makes this doubly bad, in terms of policy, is that Obamacare spends trillions of dollars subsidizing the cost of insurance for the uninsured. And most people who are uninsured are young. In other words, Obamacare will more than double the cost of health insurance for many young people, and then the law will turn around and spend taxpayer dollars to subsidize the purchase of this newly costly insurance. Only in Washington does this make any sense.
Speaking of things that don’t make sense, Obamacare was sold to Americans as a way to expand insurance coverage (or at least that’s the line the White House used after having to give up on the idea that it would reduce insurance costs) and yet for all too many poor college students it has done the exact opposite. Jonathan Dame reports for USA Today:
But many college and graduate students — either by choice or because their parents lack coverage — are still enrolling in university-sponsored health care plans, which have been forced to adapt or discontinue with the gradual implementation of the ACA over the past few years.
“Most of the schools we’re tracking say they have had increases in enrollment in their student health plan over the last two to three years, despite the age 26 provision,” says Stephen Beckley, who runs a health care management consulting firm that specializes in higher education. . .
Between the 2011-2012 and 2012-2013 school years, the average annual cost of student plans for those age 25 or younger increased 9% at public colleges and universities and 7.8% at private colleges and universities, according to the study of 40 institutions.
Unfortunately, some students are seeing their health insurance costs soar far above the average. At the State University of New York the premium jumped from $440 to between $1,300 and $1,600. At Lenoir-Rhyne the premiums soared from $245 to $2,507. And Bowie State students, who previously could get coverage for less than $100 per year, lost their coverage altogether when premiums were set to increase to $1,800.
For those young adults who are unlucky enough to not have an insured parent, or have a parent who can’t afford the extra monthly expense, or even those young adults who simply reject the idea that at age 26 they should be dependent on their parents, Obamacare simply leaves them out in the cold.
This is what happens when a bunch of bureaucrats, politicians and lobbyists try to come together to write a coherent law. Unfortunately, the outcome is much worse than a horse designed by committee, it’s Frankenstein’s monster sewed together with spare parts.