Starting next year, the Affordable Care Act will severely weaken the link between health insurance premiums and age-related risks. Health insurance companies won’t be allowed to charge older people any more than three times what they charge younger people for premiums. This is bad news for the young.
Preventing health insurers from fully accounting for age will not change the reality that, in general, the older you are, the greater your medical expenses (six times greater, when you compare 64-year-olds to 18-year-olds). These are costs that someone has to pay. If insurers can’t charge those older according to their risk, they have to overcharge those younger to make up the cost. In California, for example, once the new health law’s various rate restrictions and other provisions kick in, 25-year-old non-smoking men will see their premiums at least double.
As slogans go, “Let’s fleece our children and grandchildren” is not likely to draw much support. So proponents of the health law are trying to make their scheme palatable by arguing that it actually benefits the younger generation.
“[T]oday’s young people will be tomorrow’s old people,” says Matthew Yglesias of Slate, so while this arrangement may not benefit the young now, it will eventually do so. A senior official at the AARP echoes this sentiment, insisting, “If a younger, healthier person is spending a little more now, it’s okay because at some point they’re going to be a less healthy, older person too.”
But it’s of no benefit to anyone, young or old, to be forced into a scheme in which others dictate how he should arrange for his medical expenses. What’s in a young person’s interest is to be free to decide that for himself, in the context of his other priorities in life.
Consider that 25-year-old non-smoking male in California — let’s call him Brian. Brian is a freelance web developer committed to gaining enough experience and saving up enough money to one day start his own company.
Every dollar Brian can save right now brings him one step closer to starting and growing his business. In a truly free market, Brian would be able to choose a health insurance policy that best aligns with this goal. He could, for example, buy a policy that’s priced to reflect the real risk that he’ll get sick — just as he buys car insurance priced according to his risk of meeting with an accident. Since Brian is young and healthy, his premiums would be relatively low (just as safer drivers pay lower premiums), allowing him to put more of his income toward his start-up. Brian knows that when he’s older and in a higher-risk category, health insurers may charge him higher premiums, but that’s a fact he’s willing to face.
Even though Brian judges this to be the best way to manage his medical expenses, under the health law, it’s illegal for insurers to offer him a policy geared to his actual risk. Instead, per government mandate, a portion of the income he earns and intends to use to build his life is channeled into the pockets of others.
As a result of this and the many other wealth redistribution provisions in the health law, Brian’s goals are impeded. Maybe it takes him much longer to start the business he’s always wanted. When he finally does, maybe his venture is stunted by a lack of cash to put back into the business. Or maybe Brian must scale back or give up entirely his life-long goal, because by the time he can finance the start-up, he has a family and decides he can’t afford to take such a big risk.
Whatever the case, when Brian is sixty, he might get a few dollars from the younger generation (if they haven’t yet awakened to the injustice of the scheme, and if the whole system hasn’t already crashed). Meanwhile, Brian will have paid a high price, having been denied throughout the course of his life the right to decide how best to use his earnings.
Is it any wonder that the health law’s redistribution schemes had to be forced on people, by law? Nobody would choose to spend their own money this way.
The health law’s age-related rate restriction milks the hard-earned income of young people — those just starting out in life — for the sake of those older, sacrificing in the process a young person’s own goals and dreams. If they were honest, supporters of the law would admit this openly, instead of adding insult to injury by calling their immoral scheme a benefit to the young.