Opponents of the American Health Care Act (AHCA) have been on a 24-hour blitz bashing the Obamacare replacement using a new report from the Congressional Budget Office (CBO). The report shows 24 million people will either lose or forgo coverage in the next ten years, mostly from the repeal of the individual mandate.
But ignored in the report are numerous pieces of good news for millennials — really good news, actually.
The CBO says TrumpCare will “substantially reduc[e] premiums for young adults,” “generally reduce the percentage of income that younger people had to pay toward their premiums,” add 1 million more people to nongroup coverage rolls as “result of higher enrollment among younger people,” and would be “priced closer to the amount of the premium tax credit so that a younger person would have low out-of-pocket costs for premiums and would be more likely to enroll.”
Lower premiums. Lower out-of-pocket-costs. Higher enrollment. Oh, and did I mention CBO says it will lower the deficit by $337 million over ten years?
Even for conservatives skeptical of TrumpCare, there are good signs about a future compromise. Most of these millennial benefits don’t rely only on the refundable tax credits, a.k.a. the “new entitlement program.” If these tax credits get reduced, it would have a minimal effect on most millennials, while making the deficit savings even bigger — which reduces the debt burden on these future taxpayers.
Let’s get into the report to show why the CBO is so bullish on millennials benefiting from the GOP plan.
The biggest benefit for younger Americans comes from repealing the damaging price controls in Obamacare, which forced insurers to charge younger Americans at a significantly higher rate.
“Under the legislation, insurers would be allowed to generally charge five times more for older enrollees than younger ones rather than three times more as under current law, substantially reducing premiums for young adults and substantially raising premiums for older people.”
The repeal of Obamacare gets rid of actuarial rules that negatively impacted costs for younger Americans. Under the AHCA, insurers could market plans directly to low-risk young people, offer catastrophic coverage, and provide a much more affordable product.
“The requirement that insurers offer both a plan with an actuarial value of 70 percent and one with an actuarial value of 80 percent in order to participate in the marketplace would no longer apply under the legislation. As a result, an insurer could choose to sell only plans with lower actuarial values. Many insurers would find that option attractive because they could offer a plan priced closer to the amount of the premium tax credit so that a younger person would have low out-of-pocket costs for premiums and would be more likely to enroll.”
The GOP’s change in structure of the tax credits for insurance would also help young people. Even if these credits are reduced, the new structure favors millennials. This results in lower insurance costs and higher millennial enrollment.
“For those with household income exceeding 150 percent of the FPL, the legislation would generally reduce the percentage of income that younger people had to pay toward their premiums…”
“CBO and JCT expect that roughly 1 million more people would enroll in coverage obtained through the nongroup market as a result of the change in the structure of premium tax credits. That increase would be the net result of higher enrollment among younger people…”
With these changes combined, those millennials who do not get their insurance from their employers (the “nongroup market”) would see dramatic savings and a real reduction in the cost curve.
“By 2026, CBO and JCT project, premiums in the nongroup market would be 20 percent to 25 percent lower for a 21-year-old and 8 percent to 10 percent lower for a 40-year-old…”
And, of course, the CBO shows the GOP plan lowers the deficit and reduces debt passed to future generations. This makes our government more financially sustainable.
“CBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017-2026 period.”
Now, is this plan perfect for millennials? No — but there’s an easy fix. In Speaker Paul Ryan’s draft, he proposes that insurance companies place a 30 percent surcharge on people who try to buy insurance after a long period of not being covered; this is the replacement for the individual mandate.
This penalty benefits insurance companies and is as morally bankrupt an idea as the individual mandate. Punishing younger, poorer people for not getting coverage isn’t effective or just. This penalty should be cut. If anything, an incentive to get covered could be put in its place.
But beyond this penalty, the CBO report is clear: financially, TrumpCare benefits younger Americans. Will the media focus on this aspect of the CBO report as they are on the other parts? We will be waiting.