Affordable Care Act: Young People May Pay More Than They "Should" For It — Here's Why That's a Good Thing

For the sake of argument (it’s not clear if it’s for the sake of reality, yet), let’s assume that many health economists are correct and that, as a fit, healthy 26-year-old, I’m going to be paying more for my health insurance come 2014 under the Affordable Care Act (or Obamacare) than I “should” based on what I’m expected to cost (my actuarial value in wonk-speak). I’m OK with that — and if you’re in the same boat as me, I think you should be too.

A bit of background is necessary to make my case. The provisions people generally like in Obamacare, like guaranteed issue, which means you can't be denied insurance based on a pre-existing health condition; and community rating (groups of people pay the same amount, even if some are expected to cost more than others) only work if everyone — healthy and sick alike — has insurance; hence the dreaded individual mandate. Otherwise, healthy people would stay out of the insurance pool until they became less healthy, and the pool would be full of expensive, sick people. Relatively less-unhealthy people would continue to drop out of the pool as premiums increased — the “insurance death spiral” — and suddenly no one that needs health insurance would be able to afford it; the pool is full of unhealthy, expensive people.

Back to the individual mandate for a minute: knowing that there’s a mandate is useless unless you know what it mandates. The Affordable Care Act tasked the Department of Health and Human Services to come up with a list of “essential health benefits” — basically, the minimum level of “proper” insurance. Generally speaking, conservatives were hoping that this insurance floor would be extremely low, which it wasn’t. As a result, healthy individuals are compelled to have coverage that is more comprehensive than they may want ...

So, without having all of the specifics, it’s fair to say that, as a fit, healthy 26-year-old, I’ll pay more under Obamacare than I otherwise would; individually, I’d be better off with a high-deductible plan. In a real way, I’ll be subsidizing less healthy individuals’ health insurance — and so will everyone else who is similarly healthy. The less healthy and less fortunate will get a better deal, and will likely pay less than they otherwise would.

A common, reasonable response to this is something along the lines of, “So what? Why should I be required to pay more than I’m expected to cost?” That’s a legitimate question, and it comes with a much larger, weighty argument that touches on philosophy, society, and more. I don’t have the space to get too deep on these issues — and I’m definitely no expert — but to briefly touch on each:

Philosophy: The “Veil of Ignorance”

If you didn’t know how healthy or wealthy you were, how would you want America’s health care system to work? Would it be more like it was pre-Obamacare or post-Obamacare? And, assuming a post-Obamacare environment, would you want a system with the healthy and less healthy together, or separate?

Thinking through actions with this method is known as being under the “Veil of Ignorance,” a thought experiment popularized by John Rawls in A Theory of Justice. It asks a person to think about what they would want if they didn’t know where in society they’d be.

Personally, under the veil I’d prefer the ways things are post-Obamacare, as it ensures that someone with a pre-existing health condition can receive affordable care. And I’d want the healthy and less healthy to be in one insurance pool, so that the total costs are distributed widely — even if that means the healthy will pay more than they are expected to cost.

Does Obamacare accomplish this seamlessly? Of course not. But it gets American society much closer to what many would want under the veil.

Society: If You’re Young and Healthy, You’re Lucky

There’s no veil in the real world. You know you’re young and healthy; why should you want to pay more? Because you’re young and healthy — and that makes you lucky.

Sure, you may see your friends eat too much, drink too much, and smoke too much while you eat right and exercise; why pay for their bad decisions? Why not make them pay for those decisions by way of having higher insurance?

Because those decisions are just some of many factors that play into whether a person is healthy or unhealthy. Genes play a role in determining whether someone is predisposed to being overweight; their environment does too..

That isn’t to undersell personal choice, and genes aren’t destiny — environments are probably more integral to overall health — but genes do play an important role. As someone with “good genes” you’re naturally fortunate; “giving back” in the form of paying higher health insurance premiums is a reasonable counterbalance, I think. It’s being your brother’s keeper.  

 

That’s why I’m not fuming over the prospect of paying more for health insurance than I would be expected to. I’m extremely fortunate to be young and healthy, and I think American society is better off with me paying a bit more.

You may have a (totally legitimate) different opinion, though. Are you in the same boat as I am but feel differently? Does Obamacare allow you to purchase insurance you otherwise would be barred from?