As I was talking with the founder of a large American corporation, the conversation turned to health care reform. His employees in their 20s, on average, cost the company about $1,500 a year in health bills, those in their 50s 10 times more. The effect of proposed health care reform -- which limits the ability of insurers to charge higher premiums for older adults -- would be, he said, a large shift of America's health care burden to the younger generation.
This is not an unintended consequence of reform; it is the whole purpose. It is the main funding mechanism for reform. Because younger people have lower health costs, reformers want to draft them into the broader health insurance system so their premiums can subsidize the health expenses of older, sicker health care consumers. Thus, in every version of health care reform, the young are required to purchase coverage, on penalty of an "excise tax."
This mandate explains the political coalition behind health care reform. Insurance companies are willing to accept tighter government regulation on matters such as the coverage of preexisting conditions -- but only if they are given guaranteed access to millions of younger, healthier premium payers. Congress gets additional resources from the young to expand insurance coverage, with less need to raise taxes overtly.
Advocates for the elderly welcome an intergenerational subsidy that reduces premiums for older Americans.
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Amazingly -- out of idealism, ignorance or both -- people in their 20s remain the strongest supporters of health care reform. They are also the most likely group to wake up the day after passage of Obamacare with a health reform hangover -- forced to buy coverage at higher premiums to reduce the cost of someone else's health insurance.
Legislators, perhaps fearing that future anger, seek to soften the blow. The Senate Finance Committee bill would allow insurance companies to charge older adults a maximum of four times more than young people -- reducing premium increases for the young by making the elderly carry more of their own weight. The House bill would set the maximum premium difference between old and young at two to one. Both the House and Senate bills also provide subsidies for those with low incomes to make health insurance more affordable.
There are arguments for mandating the purchase of higher-priced insurance by the young. It would, on the bright side, leave less disposable income for nose rings and tattoos. And perhaps the ownership of health insurance, in an ideal world, should be a social expectation, like the ownership of auto insurance.
But this burden on the young comes in a series. The most consequential element of the New Deal -- Social Security -- has been a large transfer of resources from young to old. The same is true of the Great Society's Medicare program. Two-thirds of Medicaid spending goes to nursing homes.