Young Adults and the Affordable Care Act

What is the Patient Protection and Affordable Care Act?

The intent behind the Patient Protection and Affordable Care Act (PPACA) was to reduce the number of Americans without health insurance and reduce the cost of health care overall. But will these objectives be achieved? Consider the situation of young adults and the Affordable Care Act, known colloquially as Obamacare.

A study published in the January/February 2013 issue of the actuarial publication Contingencies and conducted by the management consulting firm Oliver Wyman suggests that young people may be forced to pay a disproportionately high premium. The act limits the amount of premium that insurance companies may charge elderly people for health insurance to a maximum of three times the amount of premium paid by people under the age of 30. This has the laudable aim of making sure that seniors are not paying excessive insurance premiums.

The results of this imbalance may have negative consequences on young adults who may be unable to pay higher premiums, not to mention destabilizing the health insurance market as a whole. The premiums paid by today's young, comparative healthy population are financing the medical care provided to seniors who are sick now. If higher premiums force the paying generation out of the market, this could create an imbalance between the risk pools of people with health care needs now and those who are attempting to manage the risk of becoming ill in the distant future.

Young Adults and the Affordable Care Act

To put this into context, the link between prices for older patients versus young adults could mean a 42% increase in insurance premiums for people between the ages of 21 and 29 years old who are seeking individual health care coverage. The Wyman study further projects that people in their 30s can expect to pay premium increases of 31% while those in the 60-64 age group would see their health insurance premiums increased by only around 1 percent. The Wyman report further projects that nearly 4 million currently uninsured young adults will be paying higher premiums under Obamacare than they would otherwise. This is clearly inconsistent with the spirit of the act.

The Affordable Care Act Summary

So while the intention of the act is to provide affordable care for seniors, this will simply not happen if the people who are being expected to foot the bill opt out of the health insurance market altogether because of higher premiums.