Study: Young adults lack incentive to buy ObamaCare coverage

The conservative American Action Forum (AAF) released a study on Tuesday saying that the individual mandate penalty may never be substantial enough an incentive to get young adults to buy into the ObamaCare exchanges.

The study finds that after accounting for cost-sharing and subsidies in 2014, it would still be cheaper for 86 percent of young adults to forgo coverage and to pay the individual mandate instead.


That percentage decreases to 71 in 2015, and 62 in 2016, as the individual mandate penalty goes up.

“Even after the mandate penalty is fully implemented, a majority of young adult households will find that it is financially advantageous for them to forgo health insurance, pay the mandate penalty, and personally cover their own health care expenses,” the study says.

While this would leave young adults vulnerable to extremely high medical bills if they endured a catastrophic illness or accident, the study highlights the challenge the Obama administration has in its push to enroll the “young invincibles.”

The Department of Health and Human Services (HHS) reported earlier this month that 24 percent of ObamaCare’s enrollees are young people. A Kaiser Family Foundation report released last year estimated that number needed to be around 40 percent for the law to work optimally.

Older people, who are typically more expensive to cover, made up the single largest group of ObamaCare enrollees.

To keep premiums affordable, experts say it is vital that the law attract a substantial number of young and healthy “invincibles” unlikely to need critical care to balance out older and sicker uninsured people who enroll and will be more costly to the system.

The Obama administration says it expects young adults to sign up in higher numbers before open enrollment ends on March 31, as many observers expected younger and healthier people would put off enrolling until the last second.

It was also expected that some of the nation’s sickest people who were uninsured would rush first to the new exchanges.

The administration is presently engaged in a sustained outreach effort toward young adults who don’t presently have coverage, and even those who do, as many could qualify for financial subsidies through the exchanges.

The AAF said this wouldn’t be enough.

“Through its insurance market reforms and overly prescriptive benefit design, the ACA makes the decision to purchase health insurance more costly than it previously was for the vast majority of young adults, while at the same time significantly reducing the risks associated with the decision to go without coverage,” the study says.

“Whether young adults make the decision to purchase health insurance will depend on many factors, but the perverse economics of the ACA discourages young adults from joining the health insurance system.”

Still, experts say even if the 2014 open enrollment period only pulls 25 percent from the 18- to- 34-year-old age group, the rise in premiums would be minimal in the near-term.