It’s Not Just Healthcare.gov: Obamacare Has A Serious Age Discrimination Problem

The Obama Administration is desperate to get young people to sign up for health insurance under the federal healthcare reform law. So they’ve enlisted a team of almost universally trusted spokespeople to lobby the youth of America — their mothers.

One ad from the Obama-allied group Organizing for Action encourages moms to have “the talk” with their adult children about buying health insurance. AARP urges them to send Obamacare e-cards to their kids.

But slick marketing can’t overcome Obamacare’s harsh reality for young people. The law forces them to pay sky-high premiums so that older people can pay less. As a result, young people are defying the president — and their mothers, too — by increasingly refusing to purchase health insurance.

If this trend keeps up, Obamacare’s revamped insurance marketplace could collapse.

In California, for example, 34 percent of those who signed up in the first month were between the ages of 55 and 64. That’s twice their share of the state’s Obamacare-eligible under-65 population.

At the other end of the spectrum, just 23 percent of those Californians enrolling were between 18 and 34 — even though they account for about 36 percent of the state’s eligible population.

In Connecticut and Kentucky, the over-55 crowd accounts for the biggest chunk of new enrollees. Priority Health, an insurer, reports that the average age of those who’ve signed up with its plans in Michigan is 51.

It’s possible that the young are simply procrastinating — scared off by the technical dysfunction that has thus far plagued the websites of both the state and federal exchanges. After all, a December poll found that 83 percent of young people think Americans should be concerned about security of personal data in exchange.

Then again, why would they want to buy insurance later on? It’s not as if coverage will suddenly become affordable at the end of the year.

A study by the Heritage Foundation found that the average cost of insurance for 27-year-olds is far above what’s available today in all but five states. It’s up 24 percent in California, 64 percent in Connecticut, 118 percent in Michigan, and 252 percent in Virginia.

In fact, the young are growing increasingly resentful about Obamacare as they learn how it will hit their pocketbooks.

In a blog post in the Los Angeles Times, 34-year-old Matthew Fleischer noted that after his health insurance company canceled the plan he liked, he faced far higher premiums for worse coverage.

Fleischer warned that the young “feel we’re being taken advantage of,” and that the government “can only ride our backs for so long before we’re going to tell you enough is enough.”

Obamacare’s backers say that concerns like these are overblown because tax subsidies provided by the law will offset much of the increase in cost. But more than a million lower-income young people may not get any subsidies, because of the complicated formula used to calculate them.

Subsidies are figured on a sliding scale as a percentage of income, with people at the bottom of the income distribution forking over 2 percent of income. Those earning between 300 and 400 percent of the poverty level will be asked to pay 9.5 percent of income.

Obamacare tries to limit the value of that subsidy by pegging it to the cost of the second-lowest “silver” plan on the exchanges — roughly speaking, a middle-of-the-road plan in terms of benefits, deductibles, cost-sharing, and the like.

The subsidy is the difference between the percentage of income and the cost of the second-lowest silver plan.

Here’s how that calculation works out in practice. A young person making as little as $27,400 a year in Chicago, for instance, will receive no subsidy, according to a recent CNN analysis, even though the cheapest insurance would cost about $2,000 a year.

In California, folks between the ages of 21 and 24 will see their subsidies vanish once they hit $29,141 in annual income.

In Virginia, subsidies disappear for a 21-year-old at $29,537. The cost of a mid-level “silver” plan on the exchange, meanwhile, will be $2,439 — a tab which that 21-year-old will have to cover entirely himself.

If young people opt not to pay those premiums, Obamacare could collapse.

One of the law’s central features is “guaranteed issue,” which bans insurance companies from denying coverage to those with preexisting conditions.

A companion rule — “community rating” — stipulates that insurance companies can only charge the oldest enrollee three times more than the youngest. Smokers’ premiums are capped at 1.5 times those of non-smokers, and insurers may not levy different charges to men and women of the same age who live in the same geographic area.

Consequently, the young and healthy pay more, so the older and sicker can pay less.

But in order to make these reforms work, sufficient numbers of young and healthy have to pay into the pool. If they don’t, premiums climb ever higher, as the risk pool grows sicker and sicker. This so-called “insurance death spiral” could unravel Obamacare, if it comes about.

The botched rollout of Obamacare’s exchanges has offered a preview of the dysfunction the law will wreak on America’s healthcare system. If the young don’t heed the maternal hectoring of the Obama Administration — and continue to stay away from those exchanges — the law’s end could be near.