“Young Invincibles” in Colo. Stay Away from Obamacare Plans

January 16, 2014
If young adults in Colorado continue to shun health insurance, the monthly prices for individual health policies will continue to rise

Far fewer young people are signing up for health plans than expected

WASHINGTON –  “Young invincibles” in Colorado have largely shrugged their shoulders so far at an edgy health-insurance ad campaign that has targeted them if sign-up figures for new policies are any clue. And their reluctance could mean significantly higher premiums for everyone else who buys individual insurance in the state.

Barely more than one in five (22 percent) of those who signed up for health insurance under the state-based exchange from October to December were 18 to 34 years old, according to the U.S. Department of Health and Human Services. About 11,000 of the 50,125 enrollees were young adults.

The share of 18-to-34 year old enrollees so far — those who haven’t signed up are called “young invincibles” because of their belief they don’t need health insurance — is less than even the estimates of a nationally-recognized health organization.

A December report from the Kaiser Family Foundation laid out two scenarios for young-adult enrollment in the nation. In the worst-case scenario, the share of young adults who bought individual health plans was 25 percent.

The result of such an imbalance would cause  insurers who sell on the individual market to lose money, authors Larry Leavitt, Gary Claxton, and Anthony concluded.

“If this more extreme assumption of low enrollment among young adults holds, overall costs for individual market plans would be about 2.4 percent higher than premium revenues,” they wrote in “The Numbers Behind the ‘Young Invincibles’ and  the Affordable Care Act.”

Leavitt did not return two voicemails for this story. Ben Davis, the spokesman for Onsight Public Affairs, a firm that promotes Connect for Health Colorado, did not return a voicemail.

Eighteen to 34 year olds are the most highly coveted age group among backers of Obamacare, for two reasons.  They are the most likely to be healthy and therefore least likely to use the health services their plan offers.  Also, the new law requires that premiums based on age cannot vary more than a three-to-one ratio: a 64 year-old’s plan cannot cost more than three times that of an 18-year-old’s.

Having a large pool of young, healthy enrollees allows insurers to cut their losses from among the older, sicker enrollees whom they cannot charge as much as before. “For this system to work, young people need to enroll in sufficient numbers to produce a surplus in premiums revenues that can be used to cross subsidize the deficit created by the enrollment of older people,” the Kaiser report concluded. It put the proportion of young adults who should be enrolled at 40 percent.

Efforts to get young adults to sign up have made national headlines since “got insurance?” ads debuted in the fall.  Underneath the slogan have been pictures of young men seeking to tap a beer keg, a woman boasting of getting free artificial birth-control pills, and a child using a knife to carve a pumpkin.

The promise of spirits and sex and the threat of a self-inflicted stab wound might have prompted some Coloradans to enroll in the state marketplace. More than 40,000 signed up in December, a four-fold increase from the previous two months combined.

Yet the controversial ad campaign has not convinced enough young adults or older Coloradans to sign up. State officials have said 140,000 people who had been uninsured need to sign up for the law to succeed.

HHS officials attributed the low figures among young people to the technical problems that plagued the federal website, HealthCare.gov, and the procrastinating tendencies of young adults. “The general expectation is that people who are older and sicker are more likely to select coverage earlier in the enrollment period while younger and healthier people will tend to wait until towards the end of the open enrollment period (which includes March 31, 2014),” the report noted.

On the other hand, those who have signed up for a health plan have not cut a check to their new carrier necessarily. The HHS report did not provide data on the number or percentage of those who have paid for their policy. As a result, the number of those who receive health insurance may be less than those who have signed up.

In addition, the number of new enrollees may include those whose policies were cancelled because their previous plans did not provide the requisite number of services the Affordable Care Act requires. More than 300,000 Coloradans have had their plans cancelled as a result of Obamacare so far.

If young adults in Colorado continue to shun health insurance, the monthly prices for individual health policies will rise. The Kaiser report said insurers “would then likely raise premiums in 2015 to make up for the shortfall.”

Although it pooh-poohed the notion of a “death spiral” in which too few young adults sign up, the report did not address the consequences if the proportion of  18 to 34 years enrolled is barely more than one in five.

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