Will Young and Healthy Give Up Disposable Income to Pay for Insurance?

From the WSJ’s “New Health-Care Law’s Success Rests on the Young — Will Young and Healthy Give Up Disposable Income to Pay for Insurance?”

“Mr. Meiffren, who hasn’t seen a doctor in more than a year, isn’t sure buying insurance is worth it, despite a federal penalty for failing to buy coverage, starting in January.

President Barack Obama’s signature initiative rests on what Mr. Meiffren and his peers choose. If flocks of relatively healthy 20- and 30-somethings buy coverage, their insurance premiums will help offset the costs of newly insured older or sicker people who need more care. If they don’t, prices across the U.S. could spike.

Traditional insurance industry tools for managing risk—such as charging sick customers higher prices—are banned under the law, raising the importance of attracting young, healthy buyers.”

So will Mr. Meiffren buy ObamaCare health insurance?

“Interviews here with more than two dozen single workers of modest income between 24 and 31 years old suggest that insurance plans will be a hard sell. Subsidies for 26-year-old workers range from $118 a month for someone earning under $16,000 to less than $1 a month for one earning $26,500, according to an analysis of insurance data.

“I’m healthy, so it’s not in the budget,” Mr. Meiffren said after the lunch rush. He lost a full-time job—and his insurance—last fall. He said he moved to Portland from Los Angeles in March, looking for “a better vibe” and a lower cost of living.”

And because insurers can’t charge the less healthy more for insurance — you know, to help balance out the cost, and they are restricted in how much they can increase premiums each year, the insurers have the following choice: either recruit enough young and healthy (a “hard sell,” see above) or lose millions in paid claims that are not financed by premiums.

Therefore, in other words, put the financial viability of the entire insurance company at risk.

This is why I predict that those brave insurers who do get into the exchanges will lose lots of money, and then, the next year, pull out.

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