Obamacare by the numbers
To the Editor:
In his letter, “How the Affordable Health Care Act Works,” Floyd Smith was kind enough to clarify my “Who Does What for Whom?” Mr. Smith contrasts a 20-year-old and a 70-year-old within an individual private health insurance plan, a group private insurance plan, and lastly, within the Affordable Health Care Act. The chief difficulty I have with Mr. Smith’s clarification is his framing. He freezes our focus on claims, cost and payments, then infers correctly that (his) 20-year-old subsidizes (his) 70-year-old, but leaves out other considerations that bear more fully on the question, “Do 20-year-olds subsidize 70-year-olds?”
According to Mr. Smith, since the 20-year-old belongs to a group that will, on average, make fewer claims than on average for 70-year-olds,the price for a 20-year-old who purchases health care for himself/herself from the “free enterprise insurance market” will be less than the price for a 70-year-old.
Fair enough! (Though I should add “All things being equal.”)
Second, however, when the 20-year-old, as a member of an employer’s group, purchases from the same market, his/her payments become based on the risk presented, on average, by the people in that group, but now includes higher costing 70-year-olds. When costs here are averaged over the population in the group, the premium level of 20-year-olds will be higher than when he/she bought private insurance. Thirdly, when the 20-year-old finds himself/herself part of a huge nation-wide group, she/he is again subject to higher premiums because this group includes those that make greater claims. So, again, the question: Do 20-year-olds subsidize 70-year-olds?
Grant for a moment that a 20-year-old who purchases a private individual health policy pays less than a 70-year-old who purchases the same insurance, but let’s look into the (actual) life of the 20-year-old and ask:
1. What in fact did the 20 year-old-pay when the 20-year-old paid as a private individual in the free enterprise health insurance market policy?
2. What does he/she pay when he/she pays into a free market group policy?
3. How do these private market policies for the 20-year-old compare with premiums within the government/private Affordable Health Care Act?
4. What happens within each if the individual cannot pay the premium?
5. What are the costs of drugs within each policy type?
Do we just assume throughout, along with Mr. Smith, that because a group contains 70-year-olds, the pristine 20-year-old paid more as a member of that group than he/she would have paid as a single buyer winging it on his/her own? That strikes me as too narrow a focus, and grants too much.
Within my knowledge, a 20-year-old going it alone will find health care exceedingly expensive, indeed, perhaps too expensive and often problematic.
John Giannone, ST