Selling health insurance to young adults is inherently hard

Among the troubling aspects of the performance of the ACA private plan marketplace to date, the age distribution looms large. HHS officials hoped that 40% of enrollees would be in the 18-34 age range; they got 28%. The overall enrollee population in the marketplace is sicker than anticipated, leading to losses for most insurers and a sharp upward adjustment in premiums.

Some observers have argued that the ACA's subsidy structure is to blame. Jed Graham, for example, in his e-book Obamacare is a Great Mess, asserts:

While bronze plans are generally more appropriate for younger adults than older ones, the ACA pricing distortions likely account for part of the reason that enrollment has been so much more robust among older adults. For moderate-income, healthy young adults who get little to no subsidies, ACA age-rating rules have made health care significantly less affordable (Locations 656-658).

A multi-part argument is embedded above. First, reducing age-rating from the former industry standard of 5-to-1 to the ACA's 3-to-1 means higher premiums for unsubsidized young buyers. Second, the fact that unsubsidized premiums are much higher for older buyers, coupled with the pegging of income-adjusted subsidies to a silver-level plan, means that the subsidy often all but wipes out the premium for a bronze plan for an older buyer, but not for a younger one. Third, for those with low income and few or no assets, bronze plans are often close to worthless in any case.

That's all true. It's also true, though, that young adults are inherently less likely to fork out for health insurance than older adults, no matter how attractive the terms.  A recent report on employer-sponsored health insurance by the ADP Research Institute highlights this fact:

A tough progressive critique of the ACA

Over at The Incidental Economist, I have a review of IBD reporter Jed Graham's e-book analyzing flaws in the ACA and proposing a package of fixes. Here's the opening*:

Those who have closely followed the drama of Affordable Care Act implementation as it's unfolded in the media over the past two years may be familiar with the sharp criticisms of Jed Graham, a reporter at Investor's Business Daily. These include a list of cuts to work hours and jobs prompted by the employer mandate, and spotlights on the sky-high deductibles taken on by the approximately one fifth of ACA private plan buyers who chose the lowest tier bronze plans.

Given the title of Graham's e-book assessing the law, ObamaCare is a Great Mess, a sometime reader of Graham's articles might assume that he's one of the ACA's many implacable ideological opponents. That would be to ignore the subtitle, A View of the Affordable Care Act Without Partisan Blinders & How to Fix It, as well as its substantive criticisms and recommendations. Graham identifies the law's shortcomings from an essentially progressive perspective, highlighting what he presents as the regressive impact of its mandates and  the limited affordability of its offerings for many buyers.  "The heart of the ACA is basically sound," he writes. "The goal of reform should be to unclog the arteries and let the heart do its job."

Graham's proposed fixes are well worth considering (well, some of them, in my view), and there's a potential venue for trying them out (or variants that could be cast as revenue-neutral): the ACA's innovation waivers inviting states to submit alternative schemes, starting in 2017 that meet the ACA's standards for affordability and coverage at comparable cost.  The book is also a useful antidote to the triumphalism that's taken hold of many supporters since the King v. Burwell nightmare went away.

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* More or less: these paragraphs were edited down a bit for TIE.

As the ACA mandate bites harder, will a Bronze Age follow?

I have a post up at healthinsurance.org responding to a forecast by Investor's Business Daily reporter Jed Graham,to the effect that as the individual mandate clubs more people into the ACA exchanges, more low income shoppers will buy bronze plans.

Graham assumes that most of those who have remained uninsured have looked at what's on offer and decided it's too expensive, or that only bronze is affordable and that the sky-high bronze deductibles render those plans a poor value.  While that's doubtless true for some, I point to survey data indicating that large percentages of the still-uninsured don't know what's on offer.

I want to skip here to a somewhat fuller discussion of solutions Graham offers to what he calls "the bronze trap" in his just-released e-book, Obamacare is a Great Mess: A View of the Affordable Care Act Without Partisan Blinders & How to Fix It, which is well worth a read.