Policy Feature Issue: Obamacare and Youth – Why Millennials are Right to Be Concerned

As the President attempts to restore his credibility among Americans, particularly America’s youth, he should be aware that the environment has changed significantly since he last spoke to them.  A recent poll of millennials, released by Harvard’s Institute of Politics, found that today “only 41 percent of millennials approve of the President’s performance, down 11 points since Harvard’s last survey in April.”[1]

And, with respect to Obamacare, young Americans are even more suspicious.  More than half of the poll’s responders believe that healthcare costs will increase under Obamacare, with 44 percent indicating that they believe the quality of care will decline.  Moreover, almost two-thirds of the respondents say do not plan to enroll in Obamacare, which if accurate would be extremely problematic for the future viability of the federal exchanges.[2]

Millennials are right to be concerned.

1. The President promised that if Americans liked their insurance they could keep it. Yet, despite these promises and assurances, the Administration knew that Americans in the private market would lose their current health care plan.[3]  Now those predictions are playing out.  Millions of Americans are losing their plans.  In Florida, more than 300,000 cancellation letters have been distributed. In California, one million residents have received cancellation notices.[4] In New Jersey, 800,000 cancellations were sent according to the Star Ledger.[5] And, in West Virginia, already 8,800 cancellation letters were sent.[6]  Employers are also beginning to feel the effects.  Small businesses from Phoenix to Philadelphia are hearing from their insurance carriers that the current small employer plans don’t meet Obamacare’s requirements and are being cancelled.[7]

Notwithstanding the cancellations in the individual market, the President promised that Obamacare would help young Americans remain insured through dependent coverage up to age 26.  However, some employers have responded to Obamacare’s regulatory scheme by dropping dependent coverage, leaving young people without insurance.  Moreover, young adults whose parents are among the unemployed will also not have access to coverage, forcing them to purchase more expensive plans.

2. Since 2009, the President has promised Americans that they can keep their existing doctor. Yet, insurers participating in the exchanges are limiting the number of doctors and hospitals covered under their insurance plans.  Low reimbursements are also forcing doctors to reject insurers’ contracts. As a result, more and more doctors are either not included or are refusing to participate in the network of providers included on an exchange. For example, according to a recent survey conducted by the Washington Examiner, seven out of ten doctors in California are not included in the California exchange.[8] In Virginia, it is “estimated that participating doctor networks …are shrinking by 70 percent in the exchange plans.”[9] And, for the millions of Americans who have received cancellation notices, they will not only have to find new plans but new doctors as well.

3. The President promised that premiums would go down.  Yet, Obamacare will disproportionately increase premiums for young adults.  Due to age-rating restrictions, some reports estimate that premiums for young males with single coverage could increase by 180 percent if they are ineligible for premium assistance.[10]  When new requirements on age ratings and required benefits are taken into account, new entrants in the individual market could see a premium increase of as much as 413 percent, and an average 96 percent nationally.  80 percent of young people living above the poverty line will see an increase in their healthcare costs.[11]

4. The President has failed to address how young Americans are going to pay for these higher costs.  When adjusted for a declining labor force participation rate, the effective unemployment rate among young people is 16.1 percent (nearly 1.7 million unemployed young adults).[12] Obamacare only exacerbates the unacceptable employment situation for our nation’s young people.  The New York Times reported earlier this fall that the U.S. lagged behind the U.K., France, Japan, Germany, and Canada in the percentage of young people not working.[13]  22.6 million young adults (32 percent) 18 to 34 lived at home with their parents in 2012, up from 18 million (27 percent) a decade ago.[14]

The financial burden of Obamacare on young adults will negatively affect already shrinking disposable incomes nationally.  Real Per Capita disposable incomes for young people have increased by only 2.3% since June 2009, compared to an 11.3% recovery average.[15]  Obamacare will further strain the amount of disposable income available to young people, which will reduce consumerism and limit economic growth and job creation.

 


[1] See Sea Change: Poll shows young people skeptical of Obamacare, amid Obama outreach, December 4, 2013.

[2] See id.

[8] See Washington Examiner, Survey finds doctors rebelling against Obamacare, famous Hospitals declining to join, November 27, 2013.

[9] See id.

[15] Source: Data derived from Join Economic Committee Staff Calculations