Obamacare: Young People Get the Shaft, Low-Income Young People Get Medicaid

A recent study indicates that health insurance premiums could rise by as much as 40 percent as a result of President Obama’s healthcare law.  Young, healthy men would be the most negatively affected by this changed.

The Washington Examiner explains why Obamacare won’t become attractive to young people any time soon:

[T]he typical 26 year-old male with low medical expenses would have to decide next year whether he would rather pay roughly $1,700 (or more) extra for compliant health insurance as opposed to going uninsured. This is in addition to rent, food, student loan payments, credit card debt, transportation, entertainment expenses, and so on. And keep in mind, this is under the rosy scenario, as supporters of the law are holding up California as a model.   Some young Americans may decide to purchase the insurance under such circumstances. But will enough of them do so to make Obamacare functional? I remain skeptical.

Obamacare’s Medicaid expansion makes the picture even grimmer for young adults and especially low-income adults.

Heritage’s Ed Haislmaier explains that young adults in states that choose to adopt the Medicaid expansion could be trapped in low-wage and part-time jobs.  “The program creates perverse incentives that make it advantageous to have employees go into Medicaid – and stay there.”

What are these incentives?  Who would really want to sign up for a failed Medicaid program that doesn’t improve health outcomes? 

Since Obamacare requires everyone to purchase insurance or pay a fine, young people with low-income jobs will be likely to choose Medicaid.  Medicaid will be one of three options for such young people, and, since there is no premium for Medicaid, it may prove to be the most attractive option.

The other two possibilities are: 1) a low-income worker who earns too much to qualify for Medicaid and whose employer doesn’t offer coverage may qualify for subsidized coverage purchased through an Obamacare insurance exchange; and 2) low-income workers whose employers do offer coverage can be charged by their employers 9.5 percent of their pay to go toward their premium costs.

That’s not exactly “affordable.”  Haislmaier points out that clearly the cheapest option is simply for these young low-income earners to stick with Medicaid.

Worse, employers have an even greater incentive to dump their low-income employees into Medicaid so that they can avoid the Obamacare hefty $2,000 fines for not providing insurance to their least productive or newest employees, a fine that would amount to 13.8 percent increase for a minimum-wage job.

The Obamacare Medicaid expansion is a “large welfare benefit for able-bodied, childless, young adults.”  The 19 to 34-year-olds will “be able to get and keep that free health care as long as they don’t earn too much – a situation that employers will gladly help them arrange.”

To be clear, this mentality, this negative reality, will almost certainly lead to higher unemployment and underemployment.

What do we have to thank President Obama for?  We can thank him for making America less and less recognizable and making our future less and less spectacular.  As Haislmaier explains:

Indeed, higher rates of unemployment and underemployment among young adults are permanent economic features of countries that provide able-bodied adults with taxpayer-financed social-welfare benefits.

Is that the kind of America we want now or in the future?  The answer is definitively ‘no,’ but if we’re to avoid such a fate, Congress must act fast because the full onset of Obamacare is rapidly approaching.

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