Seeking Alpha

Obamacare's got an age problem

  • Just 30% of the people who have bought insurance under Obamacare are aged 34 or younger, while a third are 55 or older, a government report says.
  • That's a problem because the success of the Affordable Care Act hinges on signing up enough "young invincibles," who would need less care, in order to pay for the sick and elderly. The White House was banking on 40% of signups being aged 34 or less.
  • If the numbers don't balance out as needed, premiums could rise. Moreover, health insurers have until May to decide whether they will keep providing exchange plans in 2015.
  • Around 2.2M people bought coverage in the three months through December, 79% of whom received a discount due to federal subsidies.
  • More on Obamacare.
  • Health insurers: AET, HNT, HUM, UNH, WLP, MOH.
  • ETFS: XLV, XHE, VHT, FXH, IHF, IHI, IYH, PTH, RYH, PSCH, RXL, RXD, XHS.
From other sites
Comments (5)
  • Bosshogg55
    , contributor
    Comments (108) | Send Message
     
    My guess: This thing falls short and most insurers will pull out of the exchanges for 2015. They will all lose money because the plans will fail on an actuarial shortfall. As a result, all those who signed up since this last October will likely see their premiums either double or triple for 2015. That's when we will be transitioning into a Canadian-style single payer system. The good news is that the insurance will be free to all at that point. But, taxes will have to go up to pay for it. The lowest income tax bracket likely needed for this will have to be 50%, then escalating to around 70% (perhaps higher, like in the 1970s). And, we will also likely need a value added tax, as well as a large gasoline tax surcharge, to make up the gaps. Then, we will have a similar system in all respects to the one our Canadian neighbors have today. (With perhaps less financial privacy.)
    14 Jan 2014, 05:55 AM Reply Like
  • Andy1948
    , contributor
    Comments (12) | Send Message
     
    Health insurers figure 11 months of claims with 12 months of premium for new business. If this holds true for O'bama Care the loss numbers will be trending higher on renewal.
    14 Jan 2014, 07:19 AM Reply Like
  • Tschurin
    , contributor
    Comments (365) | Send Message
     
    I would think it's to be expected that those most in need of cheaper insurance [the older and the sick] would be the first to sign up for the new plans. We'll have to wait a few months to see if the those signing up going forward skew younger.
    14 Jan 2014, 07:47 AM Reply Like
  • Tricky
    , contributor
    Comments (1652) | Send Message
     
    Yep. From what I've been hearing/reading about the Romneycare experience, the young waited until very late in the game to sign up. Too early to tell how this story ends.
    14 Jan 2014, 08:48 AM Reply Like
  • The_Batman
    , contributor
    Comments (50) | Send Message
     
    Not sure if there is an economic incentive to pull out from the exchange. Individual policies both in and out of the exchange must provide essential health benefits. So a bare bones outside the exchange just isn't going to fly. Given there are no subsides outside the exchange and very limited underwriting the only game in town is the exchange. Unless of course you want to focus only on group plans which don't play in the exchange anyway.

     

    However, I agree with a previous comment that the young will wait until 3/31. Better plans equal more cost. But after this first year I really do think choice and a level playing field plus a larger base will reduce cost trend. But we have to be realistic.
    14 Jan 2014, 10:34 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs