Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans — a shift expected to raise insurance premiums for young people when the plan takes full effect.
Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press.
Why? The new law caps how much insurance companies can charge older, less healthy individuals, the most expensive group to insure. Specifically, the premium for an unhealthy 55-year-old can be no more than three times the premium charged to even the healthiest 20-year-old. In a free insurance market, that ratio would be more like seven-to-one. To recoup their losses on older clients, insurers will have to overcharge their younger policyholders by 17 percent, according to the AP-commissioned study and by as much as 50 percent according to other credible studies.
“The higher costs,” the AP noted, “will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.”
The only solace the new law has to offer these twentysomethings is dependency. One provision allows Millennials to stay on their parents’ health-insurance plans to age 26. Another would let low-income single adults become dependent on Medicaid, a poorly performing welfare program that rations care.