February 22, 2015
The myth of the “young invincibles” has come back to life in the editorials of the Washington Post. Folks may recall that this was the story where Obamacare would live or die depending on whether young healthy people signed up for the program. The small grain of truth to the story is that the premium for young people was slightly higher than an actuarially fair premium while the premium for those in the oldest Obamacare age band (ages 55-64) was slightly lower. This means that as a group, the young provide a modest subsidy to the old.
However the differences in costs within each age band swamp the differences across age bands. There are millions of people in the oldest age band who have little or no medical expenses each year just as there are millions of young people who have no medical expenses. Obamacare needs the former group at least as much as it needs the latter (arguably more, since the older group pays premiums that are three times as high).
The Kaiser Family Foundation did the calculations to show this point. Even a large skewing by age will make little difference in the cost of the program. It matters much more if there is a skewing on health status.
Anyhow, perhaps this study will find its way over the WaPo editorial board at some point.
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