Timothy Doescher / Lillian Wolfensohn / August 10, 2016 / 44 comments
Because of Obamacare, young people have seen up to a 44 percent increase in premiums.
For many millennials, the fear of entering the “real world” is looming. We are preparing to face the financial challenges, often feeling like we are starting the trek up Mount Everest.
Many of us are scrambling to find jobs and avoiding moving back in with our parents. We recognize more and more that good jobs putting us on a promising career path are harder to find.
But our generation faces an additional challenge. Obamacare is jeopardizing our personal freedom and our financial future in ways few saw coming and many will not be
able to handle.
So many young people believe Obamacare is helping our society and will make health care more affordable, but now it is abundantly clear that the plan is harming young people.
Here are three ways Obamacare is hurting millennials:
Health Care Costs Skyrocket
Because of Obamacare, young people have seen up to a 44 percent increase in premiums because the new 3-1 ratio (older people can’t be charged more than three times the cost of a young person’s health care) forces the young to subsidize the old in the health insurance market. Not only are elderly individuals paying artificially lower prices for their insurance, but millennials are paying artificially higher prices.
This gives young people a strong monetary incentive to go without insurance and pay the annual fine for not buying insurance and then still “free ride” at the expense of the taxpayer with hospital emergency room care when they do get sick. If these regulations weren’t in place, young people’s premiums would be reduced by around $1,100.
That’s a lot of money for many young people starting in entry-level jobs, making only $10-15 an hour.
One aspect of Obamacare that seemed appealing to millennials on the surface was that if they are age 26 or younger they can stay on their parent’s plan—assuming their parents have employment-based coverage. However, if they don’t, they must enroll through the health insurance exchanges, where their choices are scarce. If they don’t do either, they must pay a fine. What we want to do is enroll in less expensive health plans of our choice. We can’t do that under these restrictions.
In addition, some options that were specifically designed for young people have been outlawed. Most college students only need and want basic coverage, which they could get through a limited benefit plan. Obamacare has abolished these minimum coverage caps (the plan’s minimum amount of money used to cover medical expenses) that characterizes these short-term, college plans. This desirable option of limited, short-term insurance coverage is now no longer available for students.
Instead of expanding coverage, some young people have decided to go without. That defeats the whole purpose of this law.
Harder to Keep Jobs
Because of Obamacare’s mandates on businesses, employers are increasingly forced to cut back on hiring and hours of work.
Employers are forced to purchase expensive insurance packages at the risk of being fined. The law mandates to anyone employing 50 or more full-time employees to purchase federally standardized health insurance. This coverage is often very expensive because of the inclusion of a wide range of government-mandated benefits.
If businesses don’t offer the federally-approved coverage, they can be fined at a rate of $2,000 to $3,000 for each employee who isn’t covered. Employers deal with this by not absorbing the costs, but passing it on to their workers. How? By slashing hours, cutting wages, rolling back other benefits, and firing people with the least seniority.
It’s not surprising that people have had to take multiple jobs just to support themselves. For young people entering the workforce, this doesn’t make our chances of securing jobs upon graduation any easier.
An Explosion of the National Debt
If the above two reasons weren’t enough to make a young person worry, this point will for sure.
As of March 2015, Obamacare has a net cost of $1.207 trillion over the next 10 years and will add an additional $17 trillion over the next 75 years in unfunded liabilities. Our national debt is over $19 trillion, so how is the United States supposed to pay for this? Oh, that’s right, it will increase taxes on the young people who will continue to pay for Obamacare, as well as the other giant federal entitlements—Social Security, Medicare, and Medicaid—for the rest of our lives.
Not only are the young subsidizing the old through Obamacare’s unfair insurance rating rules, they are also subsidizing a large and rapidly-growing elderly population—including wealthy retirees—through their payroll and income taxes.
Imagine how much that will end up costing. Imagine how much of our hard-earned money will go toward big entitlement programs like this one, which we might never benefit from. If the goal was simply to provide help for those who could not afford health insurance, we could have easily done it without incurring Obamacare’s massive cost and debt. But that wasn’t the goal. The goal was more government intervention, and less of the free market; sadly it seems to be working.
A Better Solution for Young People
There is a better way to help the millions of Americans struggling to find affordable coverage, but not at a debilitating cost to young people.
Congressional Republicans, led by House Speaker Paul Ryan, R-Wis., recently released a plan that embraces a free marketplace, respects personal freedom, allows Americans to keep more of their hard-earned paychecks, and embraces the diversity of this wonderful land we call America.
Ryan’s plan would reform the health care system, starting with the repeal of Obamacare. The plan states: “This law cannot be fixed. Its knots of regulations, taxes, and mandates cannot be untangled.”
The congressional Republican plan will allow people to buy insurance anywhere in America, creating a highly competitive national market for health insurance.
It would give Americans more options, better quality, and intense competition that would lower costs. States would be able to regulate their own health insurance markets, meaning that Washington could no longer force employers and individuals to purchase “Washington-mandated” health plans. It would mean that young people would be able to buy insurance that fits their needs, rather than pay artificially inflated insurance premiums.
Removing the employer mandate would mean that businesses would be able to purchase coverage that is best for them, and they would be able to balance health benefits with wages and other benefits. It would also open up job opportunities, enabling businesses to hire more full-time staff instead of many part-time staff, creating more job security and larger paychecks. That would be a direct benefit to young people entering the workforce.
Obamacare was supposed to lower costs and increase access to care. While insurance coverage has increased, health care costs have soared, particularly for the young. The most energetic new workers are being slammed with higher costs of insurance, including big deductibles—forcing many to go without.
President Barack Obama said his plan would not only expand coverage, but would also control costs, reduce typical family premiums, and expand competition. In fact, its biggest achievement has been to increase cost and expand government control.
Many of our peers don’t like conservatives very much, but they don’t realize that the Ryan alternative to Obamacare will lower insurance costs—especially for millennials. This plan was created with an understanding that young people shouldn’t bear the entire burden and recognizes that our future should be full of excitement and opportunity, not high taxes, suffocating bureaucracy, and crippling premiums.
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The Daily Signal is the multimedia news organization of The Heritage Foundation.
Timothy Doescher is a research associate at The Heritage Foundation.
Lillian Wolfensohn is a senior at George Washington University and is a summer student assistant for the Project for Economic Growth at The Heritage Foundation.