Should healthy young adults opt out of Obamacare?

Updated
People take part in a group yoga practice on the morning of the summer solstice in New York's Times Square, June 21, 2013.
People take part in a group yoga practice on the morning of the summer solstice in New York's Times Square, June 21, 2013.
Lucas Jackson/Reuters

“Where’s the outrage?”
That was Dr. Scott Atlas, a senior fellow at the conservative Hoover Institution, lashing out in Forbes last year about young people’s steady support for President Obama and health care reform law. Why weren’t they rising up to protest the new mandate that they start buying insurance before they’re old and sick?
“The health law is emblematic of this administration’s policies on entitlements, from which America’s younger generation will necessarily bear the financial burden of seniors,” Atlas snubbed. “But recent polls indicate that President Obama once again has enthusiastic support from young voters… . Do young voters base votes on critical thought about policies, or on the candidate’s ability to shoot hoops?”
As we approach the full implementation of Obamacare, the Republicans are again calling on young adults to help destroy it—this time by refusing to buy health coverage through the marketplaces that will open this fall. “There are a million reasons to burn your Obamacare card, whether it’s the sky-high costs or your right to choose your own health care,” the advocacy group FreedomWorks bellows in a brash new online campaign. “We’re asking Patriots across the country to pledge to burn their Obamacare card and opt-out right now. If 3 million Americans refuse to obey this unconstitutional mandate, Obamacare falls apart for good. Together we can do this. Pledge to Burn your card today!”
Never mind that there’s no such thing as an Obamacare card (and that playing with fire is unwise if you’re swearing off health insurance). Does the Affordable Care Act take unfair advantage of healthy young adults? Can they do themselves and the country a favor by paying a tax penalty instead of buying insurance? The campaign may have an outlaw appeal (its emblem is a cigarette lighter torching a boring government form), but the message is as fatuous as it is cynical.
As President Obama said during his press conference on Friday, the idea that people without health insurance are somehow better off that way “is not backed by fact, not backed by any evidence. It’s just become an ideological fixation.”
You may recall that Republicans once championed the idea of requiring people to buy health insurance. As the Affordable Care Act was taking shape in 2009, President Obama’s progressive base clamored for a single-payer system that would cover all Americans just as Medicare now covers those 65 and older. The president ditched that idea, along with a more modest “public option,” to embrace a Republican plan that relied more heavily on the private insurance industry.
The Republicans had long argued that private insurers could provide better coverage at lower rates if everyone—young or old, healthy or sick—joined the risk pool. They believed that each of us had a social obligation to buy insurance, if only to spare the community from having to cover our bills, and they thought the government should use penalties and incentives to foster participation. The Heritage Foundation, which now demonizes the insurance mandate as an assault on liberty, once argued eloquently for it. Here’s a key passage from a seminal 1989 monograph:

If a young man wrecks his Porsche and has not had the foresight to obtain insurance, we may commiserate but society feels no obligation to repair his car. Health care is different. If a man is struck down by a heart attack in the street, Americans will care for him whether or not he has insurance. If we find that he has spent his money on other things rather than insurance, we may be angry but we will not deny him services—even if that means more prudent citizens end up paying the tab.
Many states now…require anybody driving a car to have liability insurance. But neither the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement.
A mandate on households certainly would force those with adequate means to obtain insurance protection, which would end the problem of middle-class “free riders” on society’s sense of obligation. But of course there are many lower-income households who could not reasonably afford to meet that obligation and yet are not eligible for current direct assistance programs such as Medicaid. To an extent, the problems of affordability among these families would be dealt with through … tax credits.

That would be Obamacare, right down to the tax credits. And while the health care law calls on young adults to take some responsibility for themselves, it’s carefully designed to spare them serious hardship. For starters, it forces insurance companies to tell them exactly what they’ll pay for the level of coverage they want (bronze, silver, gold or platinum). By forcing insurers to compete in a transparent marketplace, the health care law has already yielded lower-than-expected rates in 10 the 11 states where insurers have posted them for 2014.
Obamacare also uses tax credits to discount most young people’s coverage. Anyone with an income between 100% and 400% of the federal poverty level ($11,490 to $45,960 in 2013)—which is to say the vast majority of healthy young adults—will benefit accordingly. In Los Angeles, a 25-year-old man earning $17,235 will pay $34 per month for silver-level coverage next year. That’s 80% less than the same coverage would cost without the discount ($174 per month).
Suppose that young man heeds the FreedomWorks call to action. By passing on the health insurance and paying a penalty of $27 per month (the fixed rate for anyone making less than $32,500), he’ll save himself a grand total of $7 per month—the price of a turkey sandwich.
He may really want the sandwich, but he should understand that it’s not a free lunch. He’s actually choosing between two purchases. He can pay $27 a month for… nothing. Or he can pay $34 for a health plan that provides ready access to primary care and could spare him financial ruin if he suffers a serious illness or injury. “It usually costs a little more to buy the plan than pay the penalty,” says Jay Angoff, the Washington-based attorney who oversaw the initial rollout of Obamacare for the Department of Health and Human Services. “But if you look at what you’re getting in return, there’s no contest. For most people, paying an extra few bucks a month to get health insurance is the rational choice.”
Those who can’t fathom calamity at 25 are the same ones who will encounter it at 50—or at 25-and-a-half. That’s why a sustainable health care system needs to draw them in early. In a recent blog post, Princeton economist Uwe Reinhardt recalls watching freedom riders roar through the Colorado Rockies on heavy bikes, T-shirts fluttering in the wind and nothing but bandanas protecting their heads. “It is a safe bet that even the most rugged uninsured individualists among them would expect a helicopter to pick them up and fly them to Denver should they take a severe spill,” he writes. “They would expect the finest health care Denver can offer, even if they had no means to pay for either helicopter or health care. It would be presumed that America has a moral obligation to extend them this civic nicety.”
Republicans understood that paradox until a Democratic president agreed with them. Their priorities have shifted. “The one unifying principle in the Republican Party at the moment is making sure that 30 million people don’t have health care,” the president said during his press conference on Friday. “That’s hard to understand as an agenda that is going to strengthen our middle class.”
Or as a way to inspire a generation.

Should healthy young adults opt out of Obamacare?

Updated