This past Wednesday marked the first anniversary of Obamacare. While advocates spent the week highlighting the new law’s effects on different groups of Americans, we’ve done the same. A review of the facts on the ground and the conclusions of Heritage research over the past year reveal the far-reaching negative consequences of the new law.
Today, liberals are arguing that Obamacare helps young Americans. Although there are benefits from some provisions of the new law—for example, young adults can now stay on their parents’ health plan until age 26—young Americans will ultimately experience negative effects under Obamacare.
Under Obamacare, “young invincibles” are disproportionately burdened by higher insurance premiums. First, the act places a new community rating restriction on insurance companies so that they will be unable to charge premiums that differ by more than a 3:1 ratio by age. This will require younger, healthier, insured Americans to pay higher premiums to subsidize those who are older, sicker, and more expensive to insure. Since young and healthy individuals are less likely to buy insurance, policies that increase premiums will deter them from seeking coverage in the first place.
This isn’t the only way that Obamacare will cause higher premiums and create incentives to forego purchasing insurance altogether for young Americans. The new law also includes an individual mandate that all Americans purchase insurance or pay a penalty. Beyond the question of whether the mandate is constitutional, it is unlikely to be effective at encouraging younger and healthier individuals to enter the insurance market. The Heritage Foundation’s Center for Data Analysis finds that many young Americans under the age of 35 will opt out of buying coverage and instead pay the fine. As we have written in the past:
Since the individual mandate penalty will be significantly less expensive than the cost of an insurance plan, this provision will not achieve universal coverage, and insurance risk pools will begin to consist more exclusively of only those who need insurance the most: the sick and the elderly. Younger, healthier Americans will likely choose to pay the penalty, purchasing insurance only if needed.
Finally, Obamacare will add substantially to the federal deficit and does nothing to address the insolvency of the major entitlement programs, like Medicare and Medicaid. This puts future taxpayers—young Americans—on the hook for the cost of this health care overhaul and these unsustainable entitlements.
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This post was co-authored by Amanda Rae Kronquist. Kronquist is currently a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm