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Obamacare's Youth Problem Goes Deeper Than Just the 'Cool Factor'

Image courtesy of Maura Trail

It’s been a little over a month since Obamacare’s health insurance marketplace launched amidst a storm of glitches and delays, and the lack of enrollment data has left many questions surrounding the early success of the law unanswered.

Topping the list of mysteries: Will young people bother showing up to enroll?

The Affordable Care Act’s success depends on getting a substantial number of young, healthy people to buy insurance to offset costs of older, unhealthy people. The White House is hoping 7 million people will buy plans in the first year, 40% of which need to be young and healthy in order to keep costs low. 

What's almost certain is that young people aren't dodging insurance simply because they think they're invincible. An August survey by the Commonwealth Fund found that just 5% of uninsured young adults turned down coverage because they felt they didn’t need it. Nearly 70% were either covered by a family member or said it was too costly.

Individual states have tried courting the young and uninsured through ambitious ad campaigns. Maryland’s health department enlisted the NFL’s Baltimore Ravens to help spread the word about the launch, while Colorado’s “Got Insurance” ads features frat boys doing keg stands and golfing. Some seem to think that what Obamacare is missing is a bit of the same “cool factor” that helped its namesake rise to fame. But there are other factors to consider, too. 

Some who are too old to hitch a ride on their parents' insurance and might choose to dodge Obamacare this year and take the penalty hit (1% of income or $95 for individuals). And the rise of the part-time economy has created a bevy of young freelancers, who might find it difficult to commit to a health plan when they're not sure where their next paycheck is coming from. 

So far, there is barely any data available on enrollment figures. Initial figures enrollment figures will be released next week, but Health and Human Services Secretary Kathleen Sebelius said they’ve been “very low." A recent Commonwealth Fund survey showed  17% of people who were eligible to buy a plan in the marketplace enrolled in October. Of that number, a little more than 20% were between 19 and 29 years old. Still, not all is lost and early numbers don’t mean much. So few people were able to enroll during Healthcare.gov’s glitch-packed debut that it could be months before we really get a solid picture of enrollment.

There’s also Massachusetts to consider. It took a year, but after the state implemented its own universal health care in 2007, the share of young adults who were uninsured fell from 21% to 8%, according to the Commonwealth Fund.

But are young people just doing what the grownups on Capitol Hill predicted they would do— leaving their homework till the last possible minute? Or does Obamacare have a bigger problem when it comes to selling itself to younger audiences?

We spoke with a few 20-somethings to find out what they think about the new law and whether or not they’re sold.

Spooked by health care horror stories

Brian Le, 27, an event manager and nonprofit consultant who splits his time between New York and Baltimore, left a full-time job in New York in January to launch his own consulting firm. He supports Obamacare but has been wary of some of the press surrounding the law so far.

"I will say my ignorance of the overall health care reform and the recent horror stories from small businesses scares me a bit as a young entrepreneur trying to start a small business with a handful of employees," he says. Still, he plans to enroll, saying “I have learned the hard way that health care is incredibly important, both preventive and reactive health care."

In the Commonwealth Fund's survey, 22% of uninsured young adults said that cost was the main reason. However, the majority of those people earn less than $28,000 a year, putting them in the pool of Americans who are eligible for federal subsidies for Obamacare, according to the Commerce Department. To qualify for subsidies (given in the form of tax credits), consumers must earn less than 400% of the federal poverty level — $45,960 a year for an individual and $94,200 for a family of four.

However, of the uninsured adults who visited Healthcare.gov last month, less than half tried to find out if they qualify for tax credits that would reduce their premium costs, the Commonwealth Fund found. It's likely that as word of tax credits spreads, more young people will be enticed to check out their options.

Le earns too much to qualify for subsidies, he was pleasantly surprised by his plan estimate. Since he and his girlfriend are considering moving back to New York, he decided to compare benefits in both states.

For a mid-tier Silver plan in New York, he was quoted nearly $400 a month. The same plan cost $180 in Baltimore. That wide variation isn't uncommon from state to state. Insurers have only recently begun to bid in the new health care marketplace, so some state plan costs are expected to vary widely until the market has a chance to even out.

Luckily for Le, his move further South paid off.

"I was actually a little relieved," he says. "We want to move back to Brooklyn in a few years, but if i have to pay an extra $200 a month for insurance, we may double-think it."

Dealing with commitment issues

Freelancers like Maura Trail, a 29-year-old filmmaker from Virginia Beach, Va., can get temporary health benefits through long-term contract work. 

But when work dries up, like it did when Trail ended a year-long contract with a production company in September , she basically has two options: pay up to $600 a month for a policy through her freelancer’s union or hold her breath and pray that all she needs is a $100 physical once a year.  Usually, the latter option wins out.

“For freelancers, work is inconsistent and sometimes you can barely make rent and other times you have more than enough,” Trail says. “[When I’m not on a contract] what I’m making is either through unemployment benefits or I’ll get a job for a week or so, but I’m not working consistently enough to afford health care.”

The ACA gives her a third health care option, one she’s been “looking into for a long time,” she says. Trail qualifies for roughly $2,000 in subsidies per year if she buys insurance on the exchange, which would bring her cost for a mid-tier silver plan down to about $209 a month. But even that’s a challenge for a young, full-time freelancer who never knows what her next paycheck will look like.

“If I’m still floating around waiting for work in the next couple of months … I won’t be able to afford it,” she says. “I wish they would just bring down the cost of basic preventative care instead, like a regular check-up. I could pay $150 twice a year for a physical and I’d rather do that than pay for health insurance [every month].”

Thwarted by technical glitches

Adam Zmudzinski, 29, a freelance graphic designer from Fishkill, N.Y., was among the millions of privately insured Americans who found out they would be unexpectedly dropped by their insurer by year-end because his plan didn’t meet the law’s requirements.

He’s been shelling out about $250 a month for a private insurance plan for the last three years, so the idea of switching to a more affordable option was welcome.

What he would have liked was a decent heads up.

“[Enrolling] has been a really difficult process,” Zmudzinski says. First he couldn't log onto Healthcare.gov at all and for a while, and New York's health care exhange website wasn't loading either.  Finally, he managed to fill out his application online a couple of weeks ago. Then the real troubles began.

“Instead of just being able to use my last year’s taxes and paperwork, I have to fill out a totally different form with my income from the last three months and what I expect for 2014," he says. "As a freelancer, it’s kind of hard to predict what I’ll earn.”

He was told that the state would mail out additional paperwork for him to fill out in order to smooth out issues with his tax documents. But if he wants to get new insurance before he's dropped from his current plan, time isn't on his side.

Unless private insurers extend their deadlines (which some, fortunately, have already done) people who are getting dropped must sign up by Dec. 15 for new coverage on the exchange. Otherwise, they risk a gap in coverage, since it takes two weeks for insurance to kick in and their existing benefits would end Jan. 1.

Says Zmudzinski: “Obama said people would be able to keep their existing insurance if they wished to. In my opinion, Obamacare seemed good in theory but it has been terribly executed.”


Want to share your personal finance story? Drop me a line at mandiw@yahoo-inc.com.