This week, a piece by Ben Smith has been making the rounds. It’s entitled, “Obama Prepares to Screw His Base.” How is he doing so? By making them pay more for health insurance:
[W]hile one of ObamaCare's earliest provisions was a boon to the young, allowing them to stay on their parents' insurance through the age of 26, what follows may come as an unpleasant surprise to many of the president's supporters. The provisions required to make any kind of health insurance plan work — not just ObamaCare, but really any plan of its sort — require healthy young people to pay more in health insurance than they consume in services, while the elderly (saved by Sarah "Death Panels" Palin from any serious attempt to ration expensive and often futile end-of-life care) consume far more than they pay in. There is always a push and pull, however, and this year will be spent laying plans to shift the burden further toward the young.Opponents of the Affordable Care Act are latching onto this sentiment as further proof that it has “hidden” costs and problems that are heretofore unrecognized. Here is yet “one more instance” when one group is going to pay the price for another. Such arguments, unfortunately, ignore the fact that this is true of insurance – period. When I speak about insurance, I make sure to point out that it’s always about transferring money. When your house burns down, the money to pay for it to rebuilt comes from those whose houses did not burn down. When your car is in an accident, the money to fix it up comes from all the people who did not have accidents. And when you get sick, the money used to pay for your care comes from many, many people who did not get ill. That’s how insurance works. When it comes to health insurance, however, there’s even more of a stark divide. After all, some people are much more likely to get ill. We’ll call them “the elderly.” Others are far more likely to be healthy. We’ll call them “the young.” So, in general, there is going to be a transfer of money from one group to the other. In a totally underwritten market, providing short term insurance to young people will always be cheaper than providing it to elderly people. But such a market often leads to insurance becoming unaffordable as people get older. The Affordable Act seeks to fix this problem by pooling everyone together. This will make insurance more affordable to people at older ages. It will also result in increased premiums for younger people. But this is far from “screwing” them. It’s important to remember that all these “young” people will eventually be “older” people. While it may be today that insurance transfers money away from them toward those of more advanced age, one day the opposite will be true; someday money will be transferred to them by those younger than them. It’s really not much different than how insurance is supposed to function, by transferring money from the more-healthy to the more-ill. Let's not forget that many young people are seeing benefits from the Affordable Care Act already. Recent census reports have shown that 18-24 year olds have been one of the few groups to have an increase in insurance in the last few years, likely because of the ACA provision that allows kids to stay on family plans until they hit 27 years of age. For many, this is a much cheaper way for them to maintain insurance. Moreover, the elderly are doing their part, too. Has everyone already forgotten the $716 billion in Medicare cuts that are supposed to help pay for the ACA? There are plenty of valid reasons for people to dislike the Affordable Care Act. But highlighting the fact that it transfers money from those who don’t need health care to those who do is more of an attack on insurance in general than on the law itself. --Aaron Carroll