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Home Publications Blogs Beat the Press The Exchanges Need Healthy People, It Doesn't Matter If They Are Young #24,321

The Exchanges Need Healthy People, It Doesn't Matter If They Are Young #24,321

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Wednesday, 12 March 2014 05:33

Here we go again. The NYT told readers:

"A quarter of private plan enrollees are ages 18 to 34, who tend to have lower medical costs and their premiums are needed to help pay for the higher costs of insuring older and sicker consumers."

In the real world outside of wonkville wisdom the age of enrollees makes little difference to the finances of the program. It will matter if there is a skewing by health conditions. The logic is simple and straightforward. A healthy 60-year old and a healthy 25-year old both cost the system almost nothing. The healthy 60-year old will on average pay premiums that are three times as high. This is why the system needs healthy 60-year olds at least as much as it needs healthy 25-year olds.

A short analysis from the Kaiser Family Foundation goes through the arithmetic, but apparently they don't have access at the NYT.

Comments (6)Add Comment
The Exchanges needs people of "low demand;" it doesn't matter if they are healthy
written by Rachel, March 12, 2014 6:39

People who live in rural areas or have limited mobility are a source of funds to the ACA system. Poor people with incurable diseases also add to the funds of the ACA. And in any area where there is a limited supply of doctors, which is a lot of the country, thanks to the efforts of the doctors-lobby, people who are neglected, mistreated and undertreated may end up saving money they only way they can, by not taking the time off to make futile requests for services, by not wasting money on the trip to the doctor. And that too adds to the financial viability of the ACA.
...
written by skeptonomist, March 12, 2014 9:12
The importance of the younger people is in the variability of their enrollment and total number of those who have not planned to buy insurance. How many 60-year-olds are there who think they don't need health insurance, whether they're healthy or not? Younger people often don't realize how devasting a major illness can be, and they don't have nearly as much at stake (assets and dependents). Government agencies and insurance companies are not going to waste money on advertising trying to change the minds of those few older people who refuse to buy insurance. They are going to target the younger people because that is what they have to do to increase the total take and profits - that's where the money can be obtained by persuasion.
If Health Insurance Was Such a Great Deal, Why are the Numbers So Low?
written by Ellis, March 12, 2014 11:04
Do the math. There are about 40 million uninsured, and a little over 4 million have signed up so far -- of whom, only 80% will pay their first premium. Uhm... seems to be an underwhelming response.

If Obamacare was such a great deal, why aren't more people signing up? Why does the government need to use fines to get them to sign up for it? Obama keeps on insisting that health insurance only costs about what a cell phone bill or a cheese burger costs, I forget which. So why aren't they getting it? Are people just idiots, or is there another reason that Dean Baker is not tell us?

By the way, one thing Dean Baker hasn't bothered to mention is that the stock price of the top five insurance companies has increased much faster than the stock market indexes. So.... someone does think it is great deal.

Wonder why???
Isn't it
written by Lord, March 12, 2014 11:56
healthy people who don't need high subsidies? Or are you distinguishing exchanges from the program as a whole?
Same Song on NPR
written by Sirius_TheStarDog, March 12, 2014 7:07
Despite NPR's recent reporting on the Kaiser Foundation finding about the fallacy of needing tons of young to sign up for the ACA, Mara Liasson just couldn't help herself by repeating that tired debunked trope.

It's not known as Narrative Promoting Radio for nuttin.'
If a point is to extend insurance, then it make sense to target people without insurance
written by Dean, March 13, 2014 5:25
Skeptonomist,

the focus of advertising on the young is obvious if you consider who doesn't have insurance in large numbers. It would be pretty inefficient to target advertising to a group that is mostly insured.
Again, do the arithmetic. If a 60-year old has no health care costs (there are many in that category), it is much more valuable to have him/her in the pool than a 25-year-old with no expenses. The old-timer pays three times as much as the young un.

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About Beat the Press

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.

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