Policy Feature Issue: The Individual Mandate and Youth

Policy Feature Issue: The Individual Mandate and Youth

Despite the President’s assertion that Obamacare would insure every American with quality, affordable health care, its implementation fails to meet these promises.  The law vastly increases the number of childless adults on Medicaid, lowers the quality of available care, and limits patient choices.  In addition, Obamacare will cause significant increases in premiums, especially for young adults.  Obamacare will be financed by young, healthy Americans who will be mandated to buy expensive plans with high premiums or pay a fine.  The Individual Mandate will force America’s already struggling youth population to shoulder the cost burden of Obamacare while already struggling with student loan debt and a weak economic recovery.

Facts You Need to Know:

  • 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.[1]  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 nationally80 percent of young people living above the poverty line will see an increase in their healthcare costs.[2]
  • These increased costs are a significant problem considering the fact that the economic recovery has failed to rebound effectively.  A recent New York Times article reported that the U.S. lagged behind the U.K., France, Japan, Germany, and Canada in the percentage of young people not working.[3]  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.[4]  Nearly 1.8 million 16-24 year-olds were working at or below the prevailing Federal Minimum Wage. [5] In addition, nearly half of college graduates are in jobs that do not require a four year degree.[6]
  • The President promised that Obamacare would help young Americans to remain insured by allowing them to receive dependent coverage up to age 26.  However, some employers have responded by dropping dependent coverage, and this provision ultimately drives the cost of premiums higher.  Furthermore, young adults whose parents are unemployed will not have access to such benefits, forcing them to purchase increasingly expensive plans.
  • Obamacare’s 2.3% excise tax on medical device revenues, estimated to amount to $30 billion over 10 years, will cost jobs thousands of jobs.  Obamacare is estimated to cost as many as 800,000 jobs, including 45,000 jobs in the technology industry, positions primarily sought by young people.[7]  On July 15th, the Medical Imaging & Technology Alliance (MITA), the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association (MDMA) announced that medical device manufacturers have already paid an estimated $1 billion to the IRS as a result of the tax.[8]  Many of these companies are expanding in other countries due to these taxes, denying jobs to young Americans and reducing future economic growth.
  • Obamacare will limit insurance options for young adults.  Many academic institutions have responded to Obamacare’s regulatory burden by shutting down low-cost insurance programs or by significantly raising premiums.  As a result, the law will increase the cost of purchasing insurance for young people by up to 30 percent.[9]

Why is Repealing the Individual Mandate Important?

  • Obamacare will make health insurance coverage too expensive for low and middle-income young adults.  Considering that unemployment stands at 22.6 percent for 18-19 year-olds and 13.5 percent for 20-24 year-olds, a large proportion of the youth population will be unable to afford these drastic premium increases.  As a result, many will simply accept the non-compliance penalty, which effectively defeats the purpose of Obamacare (to insure every American).[10]
  • Obamacare will cost jobs in markets dominated by young people, including the technology industry.  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).[11]  Obamacare will only worsen the employment situation for the nation’s young people.
  • 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.[12]  Obamacare will further strain the amount of disposable income available to young people, which will reduce consumerism and limit economic growth and job creation.

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