The talking heads on cable news were asking two big questions this morning: Will partisan gridlock in Washington, D.C., push the nation into default and, somewhat less urgently, how many people will sign up for Obamacare? I’ve got nothing to contribute to the first question — there is no predicting the actions of crazy people. As for the second question, the really pertinent question is who will sign up for the Obamacare exchanges?
For Obamacare to work, the system needs lots of healthy young people — the so-called “young immortals” — to subsidize the less healthy older people. Sign-ups will vary from state to state, depending upon the cost of the insurance plans offered. Nationally, insurance rates are 16% lower than predicted by the Congressional Budget Office, claims the Commonwealth Institute (CI) on its blog. Here in Virginia, citizens have a choice of some 27 to 68 plans to choose from.
CI provides an interactive map comparing costs for a single 30-year-old and a family of three in different localities around the Commonwealth. According to CI, in Henrico County, “A 30 year old who makes $28,725 per year can get comprehensive coverage for as little as $172 per month, taking into account the available tax credits.”
Sounds good… Until you realize that $172 per month equals $2,064 per year, or 7.2 percent of the guy’s pre-tax income (and even more of his after-tax income). Tough choice. If you were single, 30 years old and take home less than $2,000 a month, what would you rather spend that $172 on — health care insurance that you may never use… or beer money?
Nudging the young immortals toward the insurance option more is the infamous “individual mandate,” a penalty starting at $95 a year in the first year. That’s so ludicrously low it’s hard to imagine that it will have any effect. It will be interesting to see what choices America’s young people make.
— JAB
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