U.S. Markets closed

Millennials Hate Trumpcare's Sign-Up Penalty More Than Obamacare's

Bruce Japsen

Young Americans are upset about a costly penalty for not signing up for health insurance that is woven into the Republican-led American Health Care Act, also known as Trumpcare.

The GOP House legislation pushed by House Speaker Paul Ryan would eliminate the Affordable Care Act’s individual mandate, which includes a penalty if individual Americans go without coverage. Instead, the House legislation that passed two committees last week requires “continuous coverage” that would allow insurance companies to charge a penalty “equal to 30% of the monthly premium” to someone that didn’t have insurance coverage for “63 continuous days” or longer in the previous year.

Republican House Speaker Paul Ryan uses charts and graphs to make his case for the GOP's plan to replace the Affordable Care Act, March 9, 2017, during a Capitol Hill news conference. (AP Photo/J. Scott Applewhite)

  a research and advocacy group, said of the House GOP's larger penalty for not having "continuous coverage."

Having young people discouraged from signing up for individual coverage isn’t a good thing if health insurance companies hope to improve their risk pools. Health plans operated by Aetna, Humana, UnitedHealth Group and others have scaled back sales of individual policies on the ACA’s public exchanges after the insurers were unable to manage the mounting costs of older and sicker Americans. Insurers say they need more young and healthy Americans signing up for coverage.

“House Republicans say that they want to improve the pool and bring costs down for everyone, but this plan would do the exact opposite by imposing a ‘millennial penalty,’ letting insurers charge people very steep penalties for brief lapses in coverage,” says Jen Mishory, executive director of Young Invincibles.

The Forbes eBook On Obamacare

Inside Obamacare: The Fix For America’s Ailing Health Care System explores the ways the Affordable Care Act will impact your health care.

Speaker Ryan and the Republican-led House are pushing an idea in larger penalties long pushed by the insurance industry. In the last year, insurers have complained Obamacare penalties for not signing up for coverage aren’t steep enough.

Under the GOP plan’s penalty of 30% of the premium, a person who bought a plan with a $400 monthly premium could pay $1,440 in penalties over a 12-month period, or more than double this year’s $695 Obamacare penalty for not signing up, according to a House summary.

"If the applicant had a lapse in coverage for greater than 63 days, issuers will assess a flat 30% late-enrollment surcharge on top of their base premium based on their decision to forgo coverage," the House GOP summary says. "This late-enrollment surcharge would be the same for all market entrants, regardless of health status, and discontinued after 12 months, incentivizing enrollees to remain covered."

The per-adult penalty for not signing up for Obamacare has steadily risen and was just $95 in 2014, the first year coverage was available on public exchanges.

of policies among young Americans.


“The penalty continues to increase,” Anthem chief financial officer John Gallina told Wall Street analysts during the health insurer’s second-quarter 2016 earnings call last summer. “We think all those things obviously have to be done.”

But advocates for young Americans say the penalties are a burden.

"  making it harder for younger, often healthier people to enroll,” Young Invincibles spokeswoman Schultz said.

“Life changes that can cause brief disruptions in coverage disproportionately burden young adults, who are more likely to move, change jobs or lack the resources to handle financial hardships that may lead to lapses in coverage. Young people who are working to gain an economic foothold and afford coverage shouldn't be penalized with increased rates when they try to enroll."