Either the Young and Healthy Sign Up for ObamaCare, or it will All Fail

From Emanuel in the WSJ:

Here is the specific problem: Insurance companies worry that young people, especially young men, already think they are invincible, and they are bewildered about the health-care reform in general and exchanges in particular. They may tune out, forego purchasing health insurance and opt to pay a penalty instead when their taxes come due.

The consequence would be a disproportionate number of older and sicker people purchasing insurance, which will raise insurance premiums and, in turn, discourage more people from enrolling. This reluctance to enroll would damage a key aspect of reform.

Insurance companies are spooked by this possibility, so they are already raising premiums to protect themselves from potential losses. Yet this step can help create the very problem that they are trying to avoid. If premiums are high—or even just perceived to be high—young people will be more likely to avoid buying insurance, which could start the negative, downward spiral of exchanges full of the sick and elderly with not enough healthy people paying premiums.

The problem is that Dr. Emanuel thinks that persuasion will cause someone who has not decided to purchase health insurance at the price it was, to purchase health insurance when it’s price is higher.

Furthermore, because of guaranteed issue, those sick, provided they wait until the two month open enrollment period every year, can sign up and not be turned away, hence the name, guaranteed issue. In other words, you can wait until you are sick to purchase health insurance.

The young and healthy will sign up for ObamaCare health plans if it makes economic sense, not because someone is trying to talk them into it.

And right now, it appears to me that it makes no economic sense for the young and healthy uninsured to change their minds and become insured. The only way they will sign up in the numbers needed to offset the massive crush of the sick and uninsured who will sign up is to make it be in the economic interest of the young and healthy.

Until that happens, I expect that the young and healthy will pay the $95 fine in 2014, which is due when you file your taxes in 2015.

For the young and healthy, who have already made the decision to forgo insurance when it was less expensive before ObamaCare, talking about the “morality” of charging them hundreds of dollars a month of their take home pay, will not get them to sign up.

“Shaming them” will also not work.

What will work, is that they need to see it is their own interest to sign up. And until something changes, my guess is that millions will decide to pay the $95 in April 2015, for not having health insurance in 2014.

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