Dan Lopez is a healthy 24 year old who rarely gets sick, and doesn’t see any reason to spend thousands of dollars each year on something he doesn’t use. Instead of purchasing health insurance, Dan plans to pay the $100 fine required under the Affordable Care Act, also known as Obamacare.
Dan is not alone. Many of the uninsured have no reason to buy health insurance. Under the guaranteed issue provision of the Affordable Care Act, which is still expected to go into effect in 2014, anyone can apply for and receive health insurance at any time. So it’s only logical to wait until one is sick to purchase insurance.
In other words, it makes sense under Obamacare not to purchase insurance until you have a claim. That flies against how insurance works, however, which is to guard against an unlikely catastrophic event in the future. It is illegal, for example, to buy car insurance in order to make a claim for an accident you already had.
Young adults' reluctance to purchase coverage has insurers worried. Insurance companies need to convince young adults to buy insurance before they get sick to offset the higher costs the companies will incur from older Americans. Plus, the insurance available is now more expensive thanks to the ACA’s high benefit requirements. According to consulting firm Oliver Wyman, single adults age 21 to 29 who do not qualify for subsidies will see a premium hike of 42 percent, while adults in their early 60s will see only a 1 percent increase.
Premiums are already rising throughout Pennsylvania. In fact, Highmark’s CEO has predicted massive rate hikes for individuals, up to 200 percent in 2014. The commonwealth is not unique: In other states, premiums are increasing by double digits.
Young or old, the Affordable Care Act is failing to live up to its name.
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