Will the Young Enroll in the California Health Exchange?
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Dennis Jarvis
Jun 25, 2013, 3:02:59 PM6/25/13
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Article Title: Will the Young Enroll in the California Health Exchange?
Author: Dennis Jarvis
Word Count: 808
Article URL: http://www.isnare.com/?aid=1847523&ca=Finances
Format: 64cpl
Contact The Author: http://www.isnare.com/eta.php?aid=1847523
Easy Publish Tool: http://www.isnare.com/html.php?aid=1847523
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As licensed insurance agents, we get calls daily from parents (all over the country) who are enquiring about California health insurance for their son or daughter. There's always a comment during the conversation reflecting the parent's frustration with their kid not appreciating the need for health insurance. So that's a big question...the Health Exchanges are predicated on bringing in the young Californians in order to succeed. Will they enroll? Will they join in enough numbers to make it all work? That's the real question. Let's look at why it's important and what the numbers tell us.
Guaranteed issue and health insurance mandates
There's a reason why the young need to join. On average, the young are healthier (health expenses double with each decade of a person's life with a bump during pregnancy years). There are two major changes to the California health insurance market as a result of health reform. Guaranteed issue is the big one and it means that a person cannot be declined due to health status or history. This is great news for the roughly 20% of applicants that get declined due to health but there's another key requirement in order to make this work. Everyone (or almost everyone) needs to share the risks. You need lots of healthy people to offset the few very unhealthy with expensive claims. Enter the young! You need lots if not most of them enroll. Now young people (especially men) are notoriously more risk tolerant. On their own, most of them might choose to spend health insurance premiums somewhere else. That's where the mandate comes into play.
Penalty for not buying California health insurance
The mandate is composed of a stick and a carrot. The stick is a penalty for not buying health insurance and the carrot is in the form of subsidies based on income levels. Almost everyone is required to buy health insurance and these measures work towards that aim. This also applies to most young people. The real question is whether the stick is big enough to overcome young people's inherent apathy towards purchasing health insurance. Great question and until we actually roll out Jan 1st, the best anyone can do is guestimate. We can look at it from the point of view a young person since we're now starting to see some rough numbers. So here we go!
Young people's premium and penalty comparison
The penalty for most young people in the first year will probably be 1% of their annual income. The subsidy is also based on income with pretty substantial subsidies up to 400% of the federal poverty level. Let's take a few typical examples based on different income levels. We'll assume a premium of $250/monthly for the Silver California Exchange plan.
Situation 1. 25 year old making $25K annually. In this case the penalty for not purchasing health insurance in California would be $250/annually. The annual premium amount is $3K. So $250 versus $3000. This person however, would qualify for a subsidy (400% of poverty is about $43K). That annual premium might come down to $600/annually or $50/monthly. So now we're looking at $250 in penalty versus $600 in premium. That's not a bad trade off and logic tells us that most young people would take this trade-off. Logic doesn't always apply with 25 year olds (we've all been there) and there will still be less participants than the drafters originally planned on. We only say this because we speak with the potential demographic (or their parents to be exact) daily and they don't exactly see the value of health insurance. Put it this way, they don't want cheap insurance...they want free insurance. The only way to get free in the reform bill is if you make less than 138% of the Federal Poverty Level. What about a young person that makes more?
Situation 2. 25 year old making $50K. This is going to be tricky. There will be no subsidy at that level of income and the premium is still $3K annually. It's going to be tough to convince a 25 year old making $4K monthly to spend $250 on premium based on our experience even with the constant badgering of mom.
Why it's so important that the young enroll in the California health exchange
A young person with very significant medical expenses or who is expecting one-off large expenses (knee repair for example) will get the coverage for sure. We need lots of healthy young people to not only offset this group but the older and more medically expensive people who will also enroll. We're concerned only because we actually speak to people daily in this situation and we know their view on health insurance. It will be a tough sell and ultimately, the expectations will likely be revised downward after the initial roll-out.
About The Author: Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual and Small Group California health insurance market. http://www.calhealth.net
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=1847523
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Message delivered directly to members of the group:
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*****************************************************************
Please consider this free-reprint article written by:
Dennis Jarvis
*****************************
IMPORTANT - Publication/Reprint Terms
- You have permission to publish this article electronically in free-only publications such as a website or an ezine as long as the bylines are included.
- You are not allowed to use this article for commercial purposes. The article should only be reprinted in a publicly accessible website and not in a members-only commercial site.
- You are not allowed to post/reprint this article in any sites/publications that contains or supports hate, violence, porn and warez or any indecent and illegal sites/publications.
- You are not allowed to use this article in UCE (Unsolicited Commercial Email) or SPAM. This article MUST be distributed in an opt-in email list only.
- If you distribute this article in an ezine or newsletter, we ask that you send a copy of the newsletter or ezine that contains the article to http://www.isnare.com/eta.php?aid=1847523
- If you post this article in a website/forum/blog, ALL links MUST be set to hyperlinks and we ask that you send a copy of the URL where the article is posted to http://www.isnare.com/eta.php?aid=1847523
- We request that you ask permission from the author if you want to publish this article in print.
The role of iSnare.com is only to distribute this article as part of its Article Distribution feature ( http://www.isnare.com/distribution.php ). iSnare.com does NOT own this article, please respect the author's copyright and this publication/reprint terms. If you do not agree to any of these terms, please do not reprint or publish this article.
*****************************
Article Title: Will the Young Enroll in the California Health Exchange?
Author: Dennis Jarvis
Word Count: 808
Article URL: http://www.isnare.com/?aid=1847523&ca=Finances
Format: 64cpl
Contact The Author: http://www.isnare.com/eta.php?aid=1847523
Easy Publish Tool: http://www.isnare.com/html.php?aid=1847523
*********************** ARTICLE START ***********************
As licensed insurance agents, we get calls daily from parents (all over the country) who are enquiring about California health insurance for their son or daughter. There's always a comment during the conversation reflecting the parent's frustration with their kid not appreciating the need for health insurance. So that's a big question...the Health Exchanges are predicated on bringing in the young Californians in order to succeed. Will they enroll? Will they join in enough numbers to make it all work? That's the real question. Let's look at why it's important and what the numbers tell us.
Guaranteed issue and health insurance mandates
There's a reason why the young need to join. On average, the young are healthier (health expenses double with each decade of a person's life with a bump during pregnancy years). There are two major changes to the California health insurance market as a result of health reform. Guaranteed issue is the big one and it means that a person cannot be declined due to health status or history. This is great news for the roughly 20% of applicants that get declined due to health but there's another key requirement in order to make this work. Everyone (or almost everyone) needs to share the risks. You need lots of healthy people to offset the few very unhealthy with expensive claims. Enter the young! You need lots if not most of them enroll. Now young people (especially men) are notoriously more risk tolerant. On their own, most of them might choose to spend health insurance premiums somewhere else. That's where the mandate comes into play.
Penalty for not buying California health insurance
The mandate is composed of a stick and a carrot. The stick is a penalty for not buying health insurance and the carrot is in the form of subsidies based on income levels. Almost everyone is required to buy health insurance and these measures work towards that aim. This also applies to most young people. The real question is whether the stick is big enough to overcome young people's inherent apathy towards purchasing health insurance. Great question and until we actually roll out Jan 1st, the best anyone can do is guestimate. We can look at it from the point of view a young person since we're now starting to see some rough numbers. So here we go!
Young people's premium and penalty comparison
The penalty for most young people in the first year will probably be 1% of their annual income. The subsidy is also based on income with pretty substantial subsidies up to 400% of the federal poverty level. Let's take a few typical examples based on different income levels. We'll assume a premium of $250/monthly for the Silver California Exchange plan.
Situation 1. 25 year old making $25K annually. In this case the penalty for not purchasing health insurance in California would be $250/annually. The annual premium amount is $3K. So $250 versus $3000. This person however, would qualify for a subsidy (400% of poverty is about $43K). That annual premium might come down to $600/annually or $50/monthly. So now we're looking at $250 in penalty versus $600 in premium. That's not a bad trade off and logic tells us that most young people would take this trade-off. Logic doesn't always apply with 25 year olds (we've all been there) and there will still be less participants than the drafters originally planned on. We only say this because we speak with the potential demographic (or their parents to be exact) daily and they don't exactly see the value of health insurance. Put it this way, they don't want cheap insurance...they want free insurance. The only way to get free in the reform bill is if you make less than 138% of the Federal Poverty Level. What about a young person that makes more?
Situation 2. 25 year old making $50K. This is going to be tricky. There will be no subsidy at that level of income and the premium is still $3K annually. It's going to be tough to convince a 25 year old making $4K monthly to spend $250 on premium based on our experience even with the constant badgering of mom.
Why it's so important that the young enroll in the California health exchange
A young person with very significant medical expenses or who is expecting one-off large expenses (knee repair for example) will get the coverage for sure. We need lots of healthy young people to not only offset this group but the older and more medically expensive people who will also enroll. We're concerned only because we actually speak to people daily in this situation and we know their view on health insurance. It will be a tough sell and ultimately, the expectations will likely be revised downward after the initial roll-out.
About The Author: Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual and Small Group California health insurance market. http://www.calhealth.net
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=1847523
*********************** ARTICLE END ***********************
- To distribute your articles go to http://www.isnare.com/distribution.php
- For more free-reprint articles go to http://www.isnare.com
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