Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, and read previous columns here.
Days until marketplaces launch: 32.
The conventional wisdom says that young adults, the so called "young invincibles," will prove the hardest demographic to sign up for coverage under Obamacare.
Rich Hamer, who just completed a survey of more than 3,500 uninsured Americans, thinks the conventional wisdom is wrong. His research finds, surprisingly, that young adults might be the easiest recruits.
"I think the fear that the risk pool is going to be very sick people is unwarranted," says Hamer, managing principal at Minneapolis-based Deft Research. "I think a lot of studies show that the main obstacle is affordability, and that just won't be as much of an issue with younger people."
The Obama administration has made no secret of who it wants to sign up for Obamacare: The young and healthy. These are the people who tend to have the lowest health-care costs – and they're why the White House is taking meetings with sites like Funny or Die, encouraging them to promote the law.
The concern for months now has been that young people simply won't sign up for health insurance. The reason that the White House needs them – their low health-care costs – is the exact same one that could make them the least likely demographic to purchase health care.
Deft Research, in conjunction with HealthPocket, went out and surveyed 3,584 uninsured people. The whole idea was to find out whether that was true, and which demographic was actually most resistant to purchasing coverage.
"Our objective was to figure out who is most likely to buy," Hamer says. "The first year's tax penalty isn't that high so there's not much of a penalty. So we asked a series of questions about attitudes toward health insurance."
To do this, they asked the research participants this question: "If you were considering health insurance for next year, and these two options were your only choices, which would you be most likely to choose?"
Choice A was a health plan that came with an average premium of $320. For those who earned less than 400 percent of the poverty line, and would qualify for financial assistance, they received the subsidized price.
Choice B was not buying health coverage and paying the $95 tax penalty.
In this research, they found that lower-income young adults were the most likely to say yes, they would go with Choice A.
Hamer thinks this is true for two reasons. First, young adults will face lower premiums in the health insurance marketplace than older buyers if they're purchasing coverage without a subsidy. Insurance companies are allowed to charge older subscribers three times as much as young enrollees. That average $320 premium, then, becomes $195 for an 18-year-old – and $598 for someone in their 60s. You can see that in the chart below.
"As you become older, the premiums become a lot more expensive," Hamer says. One important caveat: This is not completely true for people who use tax credits to purchase health insurance. In those situations, buyers will have their premium contribution capped as a percent of their income, which can make the base premium less relevant as a price point.
The same thing happens as you move up the income scale: Subsidies for someone at 200 percent of the poverty line (about $22,000 for an individual) is going to get significantly more subsidies than someone earning $10,000 more, hovering around 300 percent of the poverty line. Deft Research has put those data points in a chart as well.
"When you think of a 60-year-old facing a $350 bill, that's a big change in your household budget," Hamer says. "That's not going to be what younger, lower-income people face in the marketplace."
The one big factor that could intervene are health-care costs: An older person might decide a higher premium was an okay deal if he or she expected to have really high health-care costs in the coming year. And, in Deft's research, they did find that 77 percent of the most likely buyers expected to use their plan in the next year, compared to 6 percent of those who were least likely to purchase coverage.
KLIFF NOTES: The top health policy reads from around the Web.
Older Americans are giving health insurers a headache. "The programs reverse a long-standing tenet of the insurance business: That riskier customers pay more. The subsidies can be far more generous to older people than younger ones, the analysis of Ohio's marketplace shows. In some cases, older and sicker customers will pay lower prices than younger, healthier people with similar incomes — even though older people are generally costlier to cover." Christopher Weaver and Louise Radnofsky in the Wall Street Journal.
The White House is preparing for a major Obamacare push. "A burst of activity will coincide with the October opening of the insurance marketplaces, but the West Wing views this next phase as something more akin to a political campaign’s push for early votes. Over the six-month enrollment period, the White House will use the Obamas and Bidens strategically, tracking the turnout for the exchanges in key states and sending them into weak markets to boost numbers." Carrie Budoff Brown in Politico.
California is up with Obamacare enrollment ads. "The state is purposefully avoiding Hollywood stars in its opening sales pitch. Instead, the state's ads revolve around people worrying about getting care and paying their medical bills in hopes that those stories will counter persistent political attacks and widespread confusion about the Affordable Care Act." Chad Terhune and Anna Gorman in the Los Angeles Times.