Why millennials need ObamacareOctober 21, 2013: 12:02 PM ET
The campaigns encouraging young people to opt out of Obamacare are reckless and stupid.
By Matthew Segal
FORTUNE -- You may have seen or read about one of the many campaigns cajoling millennials to opt out of Obamacare. They purport that you are financially savvy or perhaps even patriotic if you choose to forego insurance in lieu of the fine. But let's be clear, opting out of Obamacare is in no way akin to burning your draft card or sitting in at a lunch counter. In fact, there's nothing even slightly heroic about it.
The arguments for opting out go a little bit something like this: Millennials are uniquely cash-strapped compared to older generations (true), we have really high student loan debt (true), and we have a tougher time in the job market than any other generation (also true). As a result, we cannot afford the added burden of being forced to purchase health insurance, or even worse, needing to pay a higher premium than you could find in the pre-Obamacare world.
That's where the logic crumbles.
There are currently 17 million uninsured Millennials now eligible to get health insurance through the Affordable Care Act. Only 5% of them claim they do not want or need health insurance, according to some polls.
In other words, despite what the opt-out crusaders might lead you to believe, young people aren't so foolish to think they will never get sick, fall down, become pregnant, develop a food allergy, or face any other spur-of the moment illness, which can cost thousands of dollars. Let's not forget that more than 50% of all personal bankruptcies in the pre-Obamacare world were due to unforeseen medical expenses.
For those who claim their premiums will rise, it's important to note that almost 90% of all young adults under age 25 will receive some form of subsidies, according to the research and policy group Young Invincibles. The insurance marketplaces have made them available to almost anyone making less than four times the poverty level. For example, a 25 year-old non-smoker making $20,000 a year would be eligible to receive up to $1,524 in subsidies and could enroll in a Bronze (i.e., cheapest) plan for only $49 per month, according to the Kaiser Family Foundation. The younger and poorer you are, the larger your subsidy will be. In states that choose to expand Medicaid, people who earn up to 133% of the poverty level, or about $15,000 for an individual, will now be eligible for completely free health care. This is an option many students and other poor young people did not have before.
If you are in the wealthier subcategory of millennials, and neither the insurance subsidies nor expansion of Medicaid applies to you, Obamacare is still beneficial. Unlike other cheap plans, the bronze plan under Obamacare offers a pretty comprehensive package of essential health benefits. These services include regular checkups, emergency services, mental health visits, and prescription drugs including birth control. Previously, these expenses would be incurred out-of-pocket and total hundreds of dollars per year, which Obamacare critics are not accounting for.
Nevertheless, I recently read an article in Forbes from an opt-out proponent who said "using insurance to pay for routine health care services distorts price signals and increases costs through layers of administration." This argument is specious on a few fronts.
First, 18% of our GDP (overall spending) goes toward health care costs. Experts estimate that much of this can be reduced through preventative care -- which is encouraged through Obamacare coverage. Unlike fire insurance or auto insurance, which covers you in totally unexpected events, there are warning signs when it comes to your health. These can be lumps you feel which can preemptively catch cancer or any number of physical early warning signs that signal us to seek medical attention. This is the best insurance policy against needing to use our catastrophic care plans.
By contending that routine health procedures distort price signals (i.e., you'd rather see them priced in a totally free market), then you are essentially disincentivizing people from getting preventative care, because they must now pay for it out of pocket. Further, if you disincentivize people from preventative care, you still end up paying for it on the back-end due to more people needing catastrophic coverage, which raises insurance rates and overall health care spending for everybody.
Also noticeably absent in arguments encouraging people to opt out of Obamacare is acknowledgment of its wildly favored provision banning discrimination against pre-existing conditions. Fifteen percent of millennials have pre-existing conditions like asthma and diabetes, and if you are not one of these young people, then surely you know one of them. These are our friends, our schoolmates, our colleagues, and family members who can no longer be denied coverage simply because of circumstances beyond their control. This will rein in predatory practices from health insurance companies who subject these individuals to disastrously high medical bills.
Opt out advocates similarly neglect to mention the hugely popular expansion of coverage to young people 26 and under who are now allowed to stay on their parents' insurance plans, regardless of their status as students or dependents. Nearly 6.6 million Americans are covered through this provision alone, according to Think Progress, and it has saved these same millennials thousands of dollars each throughout their early twenties.
Lastly, there is an argument that Obamacare disproportionately helps older people because healthy young people who pay slightly higher premiums subsidize them. Irrespective of the fact that this is how health insurance has always worked, boycotting a system because a segment of the population other than yourself will also be better off under a policy is in no way a credible reason to invalidate it. But even more importantly, you won't be young and healthy forever. Health circumstances can change at a moment's notice, and your age circumstance definitely will. You may or may not get sicker. But you will definitely get older. Do not be so myopic to think otherwise.
Matthew Segal is co-founder and President of OurTime.org, a nationwide non-profit organization that leverages online organizing, new media, and popular culture to enhance the political voice of young Americans.