Freedom Line Blog

Want to defund ObamaCare, but think DC’s politics make it impossible? Don’t worry. A new study confirms that convincing young healthy people to opt out is the best and fastest way to starve the beast.

“This study finds that in 2014 many single people aged 18-34 who do not have children will have a substantial financial incentive to forego insurance on the exchanges and instead pay the individual mandate penalty of $95 or one percent of income,” says the study’s author, David Hogberg, Ph.D.

Both the savings and the numbers of people affected are potentially huge. “About 3.7 million of those ages 18-34 will be at least $500 better off if they forgo insurance and pay the penalty,” Hogberg writes. “More than 3 million will be $1,000 better off if they go the same route. This raises the likelihood that an insufficient number of young people and healthy people will participate in the exchanges, thereby leading to a death spiral.”

The reason for the massive savings is that young and healthy people won’t use health insurance as much as older and sicker people on the same plan. Thus, the young and healthy will “cross-subsidize” the old and sick by paying in more than they take out in services.

The Obama administration knows this and is gearing up a multi-million ad campaign to convince at least 2.7 million 18-34 year olds (the amount estimated necessary to make the risk pools solvent) to buy a product ObamaCare’s architects don’t want them to use.

But if that sounds like too much of a conspiracy for some (albeit one that’s true), the young and healthy should be reminded of this: Cash-strapped cities like Chicago, Detroit and others are planning to dump thousands of retired public employees into ObamaCare’s risk pools to reduce the legacy costs associated with unsustainable union benefits. Filling the pool with even more older and sicker consumers than anticipated will make enrolling in ObamaCare even more financially absurd for the young and healthy.

Despite all the spin, paying for insurance through an ObamaCare exchange is little more than a voluntary tax on the young and healthy. If conservatives want to stop the health law in its tracks, hammering this point seems like a great way to do it.