Obamacare: A View From The Middle
Will Obama’s young supporters ensure Obamacare’s survival against their own financial interest? It is well documented that youth were key to the Obama campaign’s success in 2008 and 2012. Much of the campaigns success was predicated on getting youth engaged in the political process and approaching them in the digital places in which they reside. Obama carried 66% of under 30 votes in 2008 and 60% in 2012, but the true test of how much support he retains with the under 30 crowd is now being put to the test with Obamacare.
Affordable Care Act: Not More Affordable for Everyone
If the affordable care act works as designed, it will significantly lower costs for some but raise costs for others. In general this translates to more expensive health insurance for the young and healthy, but cheaper rates for the old and sick.
For Obamacare to work financially, it needs healthy young people to offset the costs of sick and older people who are inherently more expensive to care for. This is the whole logic behind the individual mandate; it you have a large pool of participants that include healthy people it lowers the average cost, or so the plan goes.
Misaligned Financial Incentives
For many young people who do not feel the need to purchase insurance, Obamacare might not be in their best financial interest. The penalty associated with the individual mandate in most cases is less than the cost of purchasing insurance on the exchange. While no one is invincible, many young people feel that way and may opt to pay the fine instead of buying into the system.
Pre-Existing Conditions No Longer a Risk
Another factor that could influence young people to opt out of health insurance is the fact that pre existing conditions are no longer a factor in purchasing care. Previously, if a young person opted not to buy insurance and was diagnosed with a disease, this could raise their rates dramatically or render them uninsurable all together. Under Obamacare, healthy people only need to worry about acute medical needs, like an accident because there is no longer a risk of being priced out of the insurance system if they contract a long term illness.
The Vicious Cycle
If enough healthy people do not enroll in the exchanges, then the insurance companies will raise their rates or drop out of the exchanges. This will cause people who were on the fence about purchasing insurance on the exchanges to be priced out of the market. Although the demand for healthcare at a certain point becomes inelastic, for most people, this does not happen until later in life. When a young, healthy person has to choose between insurance and daily living expenses, the elasticity of demand is likely to manifest itself.
The Rubber Meets the Road
The success of Obamacare will depend to a large extent on young people who supported him putting their money where their mouth is, purchasing health insurance to support the system, regardless of their financial self-interest. Clearly there are many people who will jump at the chance to purchase coverage. But the question remains as to whether enough young healthy people will be part of that group. Factor in the problems that have plagued the exchange website, which was designed specifically to appeal to the younger, web savvy demographic, and the situation becomes even murkier.
Can Obama Make Young People Care?
Many young people supported Obama by voting, campaigning, or volunteering for the campaign. Obama represented a fresh perspective and a potent counterpoint to the candidates backed by the GOP. The fear of a McCain or a Romney presidency, coupled with the disdain for the Bush Administration were powerful motivators. Two years later, does the passion felt by Obama’s supporters burn as bright? Are they willing to shell out the money every month do support Obama’s signature accomplishment? Or, is their support of Obama’s policies elastic as well?
