A key aspect of the Affordable Care Act are the health insurance exchanges popping up across the country. The exchanges are supposed to be a way for the uninsured to obtain coverage. The law provides subsidies for people earning up to 400 percent of the federal poverty line, $46,000.00 for a single person or $94,000.00 for a family of four so that insurance is more affordable.
The law also requires everyone to obtain health insurance or pay a penalty beginning in 2014. It’s feared that some young people might just pay the penalty, which in the first year is up to 1% of income and then rises in subsequent years up to 2.5% of income or $695 whichever is more. There’s fear that, young, healthy people may decide to opt out and pay the penalty as opposed to pay for health insurance.
Insurance is a game of averages and young, healthy people consume fewer health care services than the old or sick so the young and healthy help to spread cost and in theory a portion of the premiums paid by the young and healthy will cover the cost of the care for the old and sick. If the young and healthy population opts out of coverage the premiums for those who do choose to participate will be higher thus making insurance less affordable for all.
Young and healthy people also tend to feel invincible and it can be difficult to convince them that health insurance is a good investment. You’re going to see a lot of advertising in the coming months targeted at the young and healthy audience helping them to understand the value, and affordability, of health insurance. Their “buy in” and participation will be critical in helping the exchanges work as designed.