Does the Affordable Care Act "soak the young"?

Avik Roy revives the complaint that formed the emotional core of the legal case against the Affordable Care Act: that the act shafts young adults by forcing them to buy coverage that effectively subsidizes insurance for older adults. Here's the basis of his complaint:

Under free-market conditions—what insurance pros call experience rating—the typical 18-year-old costs one-sixth what it costs to insure the typical 64-year-old.

But Obamacare, in a sop to the AARP, requires that insurers only charge three times as much to their costliest beneficiaries what they charge to their least-costly ones. As the illustration below shows, this increases the cost of insurance for the young by 75 percent, while offering only a modest 13 percent subsidy to older Americans.

Before moving on to the core alleged problem, let's note a couple of sleights of hand at the outset:

The bogus economic basis of the case against the individual mandate

As I have noted before, the plaintiff's argument against the constitutionality of the individual mandate in the Affordable Care Act centered largely on a morality tale spun by the plaintiffs, in which the main characters were hoards of healthy young adults being forced to buy more coverage than they need in order to subsidize the coverage of older adults. The ACA is structured "to compel the uninsured into engaging in economic activity that is harmful for them" (Michael Carvin brief on the individual mandate, p. 1). "They're making young, healthy people subsidize insurance premiums for the cost that the nondiscrimination provisions have put on insurance premiums and insurance companies" (Carvin, oral argument, p. 100). In the 3/27 pleadings, Justices Alito, Roberts and Scalia appeared to buy this argument, voicing various aspects of it.

I have also pointed out that the Michael Carvin misrepresented the mandate in oral argument when he stated. "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" (p. 105). In fact, the ACA provides the catastrophic coverage option for others exempt from the mandate, e.g. on grounds of financial hardship. In the 3/27oral session, no one pointed noted explicitly that the ACA provides a catastrophic coverage option for those under 30, let alone that it extends that option to others exempt from the mandate on financial or other grounds -- or that the bronze plans offered in the exchanges, as the Kaiser Family Foundation recently detailed, might also reasonably be labeled "catastrophic" coverage.

Now, two economists from the University of Michigan, Jill Horwitz and Helen Levy, writing on the Health Affairs blog, demonstrate on several fronts that  bogus economic premises underpin the plaintiff's argument that the mandate exploits the healthy young uninsured for the sake of the sick and old -- and that it grants Congress unlimited powers to impose purchase mandates. The main thrust of their argument is that the health insurance market is unique across several dimensions, while bogus analogies to mandated purchases of cars or broccoli or whatever are each analogous in only one dimension. Then, regarding the emotional core of the plaintiffs' case -- those imagined legions of healthy young people exploited by the mandate -- Horowitz and Levy write:

Misrepresentation of the mandate in the Supreme Court: why it still matters

I have made the case below piecemeal, across many posts. This is an attempt to make it as succinctly and completely as possible.
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In his oral argument against the constitutionality of the ACA's individual mandate on March 27, plaintiff's counsel Michael Carvin asserted, "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" (p. 105).

That is not true -- the ACA provides the catastrophic coverage option for others exempt from the mandate, e.g. on grounds of financial hardship. And that factual error signals a greater distortion, one that was not countered and apparently made a major impression on Justices Alito, Roberts and Scalia: that the mandate forces Americans to buy coverage greatly in excess of what's required to offset the cost of catastrophic care for those lacking health insurance. No one pointed out that a) the ACA provides a catastrophic coverage option for those under 30; b) that it extends that option to others exempt from the mandate on financial or other grounds; or c) that the bronze plans offered in the exchanges, as the Kaiser Family Foundation recently detailed, might also reasonably be labeled "catastrophic" coverage.

It seems to me that a) the justices were misled on this potentially crucial point, and b) Kennedy and/or another might still be convinced, if not to accept the mandate as constructed, to divide the baby by further limiting it -- as Marty Lederman suggested they might:

Attention, Justices Kennedy, Roberts et al: read the young people's brief

Of the 79 amicus briefs filed with the Supreme Court on the question of the constitutionality of the individual mandate in the Affordable Care Act, arguably the one most directly germane to the main thrust of oral argument on 3/27 was a brief filed by a coalition of 20 youth organizations calling itself, with pointed irony, the Young Invincibles. Did the justices read the damn thing? The evidence from oral argument suggests not.

For all the legal intricacies regarding what kinds of regulation come within the scope of the Commerce Clause and the Necessary and Proper Clause in the Constitution, oral argument centered largely on a morality tale spun by the plaintiffs. In this tale, the main characters were hoards of healthy young adults being forced to buy more coverage than they need in order to subsidize the coverage of older adults.  The key verbs, deployed relentlessly in the plaintiffs' briefs and testimony, were force, conscript, compel, and commandeer.  Free, strong, savvy young Americans were being robbed of their ability to assess risk, drive bargains, and buy precisely the amount of risk transfer that their robust condition required. The ACA is structured "to compel the uninsured into engaging in economic activity that is harmful for them" (Carvin brief, p. 1).

Several of the justices appear to have swallowed it hook line and sinker. Alito, Roberts and Scalia buzz-sawed Solicitor General Donald Verrilli with serial restatements of it. Verrilli did point out that young people will a) become old, and b) sometimes, unpredictably, need catastrophic care.  Yet he did not bring to bear these facts: that young people overwhelmingly want health insurance; that they are disproportionately uninsured and underinsured; that their lack of health insurance causes them bodily and and economic harm; and that the ACA makes insurance affordable, not unaffordable or unduly expensive, for them.

The Young Invincibles brief articulates and documents all of these basic and readily available facts. (To these I would add that far from mandating unnecessary "Cadillac" coverage as the plaintiffs aver, the ACA provides, perhaps to a fault, a range cheap, stripped-down coverage options, including catastrophic coverage, that limit the scope of the mandate.) Some highlights: