Freedom Line Blog

It looks like the crass ad campaign aimed at getting keg-standing frat boys and promiscuous coeds to sign up for health insurance on Colorado’s Obamacare exchange is failing badly.

“The White House has set a goal of ensuring that roughly 40% of all enrollees on the federal exchange are young and healthy,” reports CNN’s Political Ticker.

“As of November 30, just 11% of total enrollees in Colorado’s exchange fall into the targeted 18 to 34 age bracket. The majority of new enrollees – more than 60% – are between 45 and 65.”

If this trend holds, it means that the funding ratios for Colorado’s insurance pools won’t work because there won’t be enough ‘young invincibles’ in the system. As I explained in a post about a similar problem in Kentucky, too few young and healthy people translates into an insufficient wealth transfer to older and sicker people.

Right now, Obamacare’s supporters are telling themselves that young people always wait till the last minute to comply, so all will be well when the enrollment period ends in March. That might be true. But if enough young invincibles pay a fine instead of enroll, Colorado, Kentucky and any other state with too few net payers will see next year’s premiums surge through the roof.

Just in time for the 2014 elections.

Gallup released a new poll this week showing that a sizeable portion of an important cohort for Obamacare’s success is planning to pay fine rather than foot the bill for most costly insurance.

The so-called young invincibles – defined by Gallup as Americans under 30 years old – is the group whose purchase of health insurance on Obamacare exchanges is most coveted because they are projected to pay for more services than they use. The money made off their premiums will cover the cost of care for older and sicker people in the risk pool.

But the financial coercion desired by Obamacare’s operators could likely hit a snag this year because the penalty for not buying insurance is only $95, or less than any monthly premium available on an exchange.

Unfortunately for Obamacare’s supporters, Gallup says that 26 percent of young invincibles are planning to pay the fine instead of buy insurance. If enough do so, Obamacare’s cost structure gets up-ended, putting the feds on the hook to cover the overruns. Private insurers will then spike premiums in future years to compensate.

The big question is, “What number is ‘enough’?” No one knows the answer.

That’s because the key number for making the Obamacare exchanges financially workable is a ratio. For Healthcare.gov – the federal exchange – the Congressional Budget Office estimates that 38 percent of the risk pool needs to be young invincibles in order for the system to operate.

That means that the critical number for Healthcare.gov isn’t whether it actually enrolls the 7 million people it originally projected; it’s whether 38 percent of whatever population enrolls is made up of young invincibles, says Ezra Klein.

Early returns aren’t boding well, reports Breitbart News. The Obama administration so far has refused to release a breakdown of federal enrollees by age bracket, but the State of Kentucky has. The Bluegrass State runs its own exchange and only 19 percent of its enrollees are between the ages of 18-34 – a span that includes more years than Gallup’s. If that trend holds throughout the enrollment period that runs through March, Kentucky – and any other exchange with less than 38 percent of young invincibles – could face the dreaded ‘death spiral’ where premium costs soar to cover a sicker population that anticipated.

For now, we’ll have to wait and see whether the Obamacare-affiliated exchanges hit the magic number by the enrollment deadline. My guess is that the lack of transparency is directly related to the failure to meet the goal.

The Cincinnati Enquirer reports that Republican Senate Leader Mitch McConnell made a very public peace with Rand Paul and Kentucky’s Tea Party movement by hiring Jesse Benton to head his reelection campaign in 2014.

Previously, Benton steered Rand Paul into Kentucky’s other U.S. Senate seat by defeating an establishment candidate handpicked by McConnell.  This cycle Benton ran Ron Paul’s presidential campaign.

With $6 million already in the bank for an election two years away, McConnell’s hiring of Benton likely shuts the door to the kind of Tea Party conservative primary challenge faced by other long-serving Republicans.

The last few days offered a study in contrasts.  Charles Djou won a plurality special election becoming just the third Republican to represent Hawaii in Congress.  He did so by sticking relentlessly to a pro-growth, low tax message that resonated in a heavily Democratic district.  While Djou won’t vote with the GOP on every issue, his commitment to fiscal conservatism will be a huge factor in whether he gets reelected to a full term in November.

Contrast Djou’s steady drum beat approach to Rand Paul’s improvisational jazz.  The Kentucky GOP senate nominee erased the euphoria of a double digit beat down of the establishment candidate last Tuesday by questioning the constitutionality of the 1964 Civil Rights Act, a federal law mandating racial equality.  His points aside, Paul took his eye off the ball by engaging the issue.  The 2010 midterm election results – and Rand Paul’s popularity – are not the product of a national rethink on the scope of Congress’s power to enforce the 14^th Amendment’s equal protection clause.

It’s about the economy, Rand.  The safest ground for limited government types this cycle is to stay on message that tax-and-spend must end.  Just Djou it.

I’ve been arguing in this space that one of the keys to a Republican resurgence will be tapping into the slightly libertarian, anti-government energy of the Tea Party movement. This strategy has the twin virtues of aligning with where the public is at right now and getting the GOP back to first principles after nearly a decade of intellectual drift.

For that reason, it’s encouraging to see that the new Public Policy Polling results in Kentucky show Dr. Rand Paul (Ron Paul’s son) with a commanding lead against the establishment candidate in the Republican primary.

While it’s as yet unclear to me whether Dr. Paul shares his father’s isolationist views on foreign policy (based on his campaign website, Rand seems ever-so-slightly more mainstream), his candidacy should be embraced on the right even if he does. Like Peter Schiff (who is running for the Republican nomination in Connecticut), Paul is a true believer in limited government, personal freedom, and Austrian economics. Having a few new U.S. Senators cut from that cloth would be more than worth the tradeoff on defense issues.