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Home Publications Blogs Beat the Press Can We Kill the "Young Invincibles" Story?

Can We Kill the "Young Invincibles" Story?

Wednesday, 19 March 2014 05:10

Bloomberg View columnist Megan McArdle gives us yet another rendition of the story of young invincibles killing Obamacare, (literally, it is the headline of the piece). Remarkably, the column actually notes the Kaiser Family Foundation analysis showing that young invincibles really don't matter much for the program. This analysis points out that because young people pay much less in premiums than older people, it really doesn't matter much whether they don't sign up in proportion to their population.

The column then cites a column by Seth Chandler, which argues that a skewing by subsidy size could indeed cause problems for the program. Chandler's analysis is undoubtedly correct and acknowledged explicitly in the Kaiser analysis. If only people receiving large subsidies of all ages sign up for the program then it will face problems, just as would be the case if only people with bad health signed up for the program. However neither Chandler nor McArdle present any reason to believe that such skewing would be correlated with the sign-up patterns of the young invincibles.

The Chandler piece also takes issue with the conclusion of the Kaiser analysis that the 2.0 percent increase in insurer costs that would result from an extreme skewing by age would be unlikely to lead to a death spiral for the system, pointing out that any increase in costs makes a death spiral more likely. While this is true, it is worth noting for comparison purposes that per capita health care costs in 2014 are about 10 percent lower than was projected in 2008. In other words, this 2.0 percent increase is only a little bit larger than average error in annual health care cost projections.

Thanks to Aaron Beeman for calling my attention to this one.

Comments (11)Add Comment
written by Last Mover, March 19, 2014 6:54

It's a cheap shot taken out of context. What the "young invincibles" face now versus pre-Obamacare by not signing up are two different things.

Before Obamacare, in addition to premiums, they avoided insurance fraud, overpricing combined with less than 80% payout for medical expense, and legalized exploitation with denial of coverage after the fact, particularly associated with "pre-existing anything".

In other words not having insurance was for many at all ages, little or no different than having it aside from useless premiums paid.

Where was McArdle then?
Meegan is on of the sillier hacks around
written by ifthethunderdontgetya™³²®©, March 19, 2014 8:44
written by Larry Signor, March 19, 2014 10:22
These are fine arguments...but unnecessary. Single payer will be the future of healthcare, making any market problems like "death spirals" irrelevant. The ACA is just the first step in a game changing health care system. Speed bumps thrown up by fear mongers will not stop the change underway in US healthcare. Equality starts here.
Can we kill the story tha the ACA is good for the near-poor?
written by Rachel, March 19, 2014 10:54

The ACA is regressive. Even NPR admitted recently that a young person making $31,000 a year will not receive a subsidy, but will have to pay 10 to 11% of income for the ACA. That is a substantial tax on the near-poor. That is a lot of people being force to NOT save, forced to live even tougher, drearier lives, often unhealthier lives, in order that high-income politicians and their friends need not burden themselves with higher taxes to pay for Medicaid.

And of course the politicians don't want to reduce any of the artificial barriers that lead to excess profits for their friends and relatives in medicine and pharmaceuticals. And so, to justify the overpricing, they invented tales like that of a mythical 35-year-old computer engineer who wants to ride a motorcycle without insurance, and then wants to stick us with his ER bills. So now the 35-year-old housekeeper, who has to take public transit to get to work, is forced to seriously overpay for the ACA.
and stop the myth that insurance was higher do to uninsured..., Low-rated comment [Show]
Single people earning up to $46,680 can get subsidy
written by Richard Genz, March 19, 2014 1:14

Don't know what NPR reported, but in fact ACA premium subsidy is available for incomes up to 4x federal poverty level, which is $46,680 for one person. Separate "cost sharing reduction" subsidy is also available for one person up to $29,175 income.
written by urban legend, March 19, 2014 1:57
Rachel -- For a 25 year old in Cook County, Illinois, there are catastrophic plans with premiums that cost 4.6% of income, and good plans around 7%. I don't know where you get that information, but for non-touchy-feely stuff NPR is not a source to be trusted.
Two statements, one without citation, one incorrect
written by Chris herbert, March 19, 2014 1:59
I don't believe the Oregon study proved what pete wrote. From the Washington Post. "So here’s what happened in the first two years of the Oregon Medicaid experiment: Medicaid proved itself good health insurance. The people who got Medicaid used more health care, and seem to have done so smartly -- they got preventive care, they got their diabetes diagnosed and began managing it, they treated their depression, and so on. But the health care itself didn’t work as well as we hoped -- at least not in terms of cutting rates of hypertension and cholesterol." And what the WaPo writer didn't know is that the study didn't study the incidence of hypertension and cholesterol reduction because it was not designed to. That kind of study concentrates it's data on people who have hypertension and cholesterol upfront; kind of how studies are done, you know? And I'd like a citation re: $31,000 'young person' having to pay 10% of income for an ACA policy.
can we also kill the business investment is weak story?
written by jim, March 19, 2014 2:21
jannet yellen just decided to join the party
written by skeptonomist, March 19, 2014 2:47
Those who want actual numbers on premiums and subsidies can consult any of several calculators which all seem to give the same answers.


For a single person earning minimum wage of $15080/yr, premium is $302/yr. Subsidies phase out by $31k/yr, but there is still a cap on premium at $2532/yr or 8.62% of income at $31k. And that's as high as the premium goes. This is for a silver plan, which has an out-of-pocket maximum of $6350. If you reach the maximum, expenses could be as high as 29% of income at $31k or even higher for lower income. If you want to reduce the deductible/out-of-pocket, premium can go up a lot.

Based on these numbers, I would say the premium support is progressive with respect to income up to $31k, and regressive above that. This is the way federal income tax rates work - once you get much above poverty level, tax rates flatten out or may even be regressive, not even considering loopholes.

This is for the generic federal exchange, no Medicaid. Some calculators give numbers for state plans.
More Nonsense from McMegan
written by Gary, March 19, 2014 4:44
Megan McArdle is an incompetent hack who has spent her entire career on wingnut welfare. Her husband is an editor at the (Koch funded) Reason magazine, and they are have been prominent attendees of Koch functions for years.

She knows nothing about business, economics or policy, and can be relied upon to spout the Republican/wingnut/Koch talking points of the day.


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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.