The lack of enthusiasm among the nation’s so-called “young invincibles” toward health reform has been well-documented, but new evidence suggests the 18- to 29-year-old demographic is largely undecided on whether or not they will purchase healthcare this year.
According to a December poll of 2,000 uninsured young people from Harvard’s Institute of Politics, nearly 40% of young invincibles have not yet made up their mind to purchase health coverage before March 31. The remainder was evenly split between the decision to enroll or to remain uninsured and pay the resulting tax penalty.
Their decision—and producers’ ability to help influence their thinking—will play a big role in market stability and overall affordability in the years to come.
“It is very important that we get those folks in,” David A. Shore, president of the Massachusetts Association of Health Underwriters, told Insurance Business. “Before the holiday, there were rumblings about the effect ‘if you like it, you can keep it’ may have on premiums. Despite available subsidies, it's expected that the consumers who will choose to retain current, non-ACA compliant coverage will be healthier than average, which could spell trouble for the remaining single risk pool for 2014 compliant plans."
Shore said the comparative affordability of old, non-compliant plans is likely what's keeping young invincibles out of the market for 2014, thereby jeopardizing rates the following year. To avoid this outcome, Shore is working as a volunteer to support educational outreach to young people contemplating health insurance.
A key factor in lowering carriers risk lies with a producer’s ability to explain the importance of choosing coverage over the tax penalty, he said--something federally employed navigators are not equipped to do.
“The educational hurtle is vast and the timeline compressed and bottlenecked. In general, we're concerned that navigators have not been adequately screened, equipped, and trained to appropriately manage thse complex conversations,” Shore said. “Consumers will be well served if the administration continues to embrace the role of the broker as an educator."
That role of trusted financial advisor is working for Las Vegas producer Dan Heffley, who said that while he hasn’t seen a large number of young people coming through his doors, he has been able to get through to some.
“I was talking to a waitress who said she was not going to sign up, but she wasn’t aware she qualified for subsidies. She came back the next day and said ‘Thank you so much,’” Heffley said. “Another of the conversations I had with her was the increase in the penalties she would experience if she didn’t buy a plan. That kind of opened her eyes, and she went home that day to try and apply.”
The tax penalty, which this year equates to $95 or 1% of annual income, doesn’t hold as much water with young invincibles in Texas, however, said Wichita Falls-based agent Kelly Fristoe.
Despite “trying like a boss” to sell to young people, Fristoe said the only 18- to 29-year-olds he has successfully enrolled are already experiencing a health condition.
“I lay it on them and I tell them a story about how, inevitably, you’re going to need healthcare, and the place you’re going to go is the most expensive place—the ER. You may only need a little bitty X-ray, but you’re going to end up having a $2,000 bill,” Fristoe said. “I lay a guilt trip on them like that and they say ‘I don’t care, I’ll pay the penalty.’”
Shore agreed, citing the relatively toothless threat of a 1% tax.
“The individual mandate is necessary, but the penalty is weak,” he said.
For the tax penalty to be effective, North Carolina producer Teri Gutierrez said rates will have to stabilize and the tax penalties increase to a level of $100 to $120 a month before young people decide to enroll.
"If we end up with 3mn on the marketplace between now and the end of March, but 50% of those are over 30 or 40, that's going to create higher rates going into 2015," Gutierrez said. "If the rates go up and keep goign up, [paying the tax penalty] is going to become even a more favorable option than buying coverage."
Even Heffley admitted that government will be “very hard pressed to get the number of young people in that they have to,” despite his belief that “the stick is working.”
“In Nevada, there were 13,000 young people that had signed up [at the end of the year], but only half had actually made payments,” he said. “We’ve got a goal of 187,000 by the end of March 31. It’s not going to happen.”
