Dangerous Thoughts
Millennial Millstone?
By
Dan Gerstein
How ObamaCare could alienate the
president's strongest supporters.
After
filing my column on the health care
bill last week, I swore I was done
writing on the issue for a while.
But as many young people may soon
learn from ObamaCare, promises are
made to be broken--or at least
fudged.
Indeed
I was struck by a new report out
Tuesday that showed the same group
of voters who helped elect our
president will once again be stuck
paying for their elders' benefits. I
could not resist wondering whether
the millennials who adopted Obama as
their own will see this as a
reasonable sacrifice for fundamental
reform or as a demographic
double-cross in a painful recession.
The
report in question, put out by the
Associated Press, looked narrowly at
the impact of the new law's
individual mandate on young people,
millions of whom currently choose to
go without insurance. Most of those
young people are expected to flood
into the system when the new mandate
goes into effect in 2014 via the
bill's new insurance exchanges. That
mass infusion of young blood would
spread the risk insurers must carry
to a much wider pool of consumers,
and in doing so substantially reduce
the cost of health insurance for
older pre-Medicare Americans (who
are typically less healthy and more
expensive to cover). Everybody
wins--at least that's how the bill
has been sold.
But
according to the analysis the AP
commissioned, that's not quite the
case. Premium costs for young
workers who buy insurance on the
individual market will likely climb
by an average of 17%, or close to
$500 a year.
This
will hit workers like Jim Schreiber,
24, who is employed at a law firm in
Obama's home city of Chicago and has
his own tea-importing business.
Schreiber told the AP he pays $120 a
month for health
insurance--"probably pure profit for
my insurance company," he said.
Without a powerful lobbying group
(like AARP for older adults), young
adults' voices have been muted, he
says. Schreiber was once an Obama
supporter, but after the health care
debate he's not so sure. "It has
made me disillusioned with the
Democrats," he said.
Many
young people may be surprised to
find out that this shift is by
design, not an unintended
consequence. The new law includes
provisions to stop insurers from
pumping up premiums purely on the
basis of age. Today, the AP reports,
insurers typically charge six to
seven times as much for older
customers as for younger ones in
states with no restrictions on
age-based pricing. ObamaCare would
change this by limiting the ratio to
3-to-1. That means a 50-year-old
could be charged only three times as
much as a 20-year-old. The rest, the
AP analysis concludes, will be
shouldered by young people in the
form of higher premiums.
Of
course, the key question, as one
young worker pointed out in the AP
story, is how much more young people
will have to pay. (Another of the
many uncertainties associated with
ObamaCare.) To be fair, the
projected 17% increase does not
factor in other provisions in the
bill that could lower costs across
the board.
Nor
does it account for the tax credits
the Obama plan will offer low-income
workers to help them afford
coverage. Those subsidies will
offset at least some of the premium
increases for young workers making
up to $43,000 a year. The White
House expects the majority of
workers under 30 to be eligible for
the credits. But that still leaves a
large group to bear the full-price
increase the AP study projects,
which could be up to 50% in some
cases.
A
bigger and clearer benefit for young
people in the new law is what I like
to call the "parental option." In
most states today, kids can stay on
their parents' plans up until age
18, and in a few states, they can
stay on through college (assuming
the parents' plan offers dependent
coverage). ObamaCare will set a new
national age limit at 26. That will
of course raise the costs of the
parents' plans. But in most cases
(if not all) it will be a cheaper
option for 20-somethings than buying
insurance on their own. That's
nothing to sneeze at, especially if
you can't afford a check-up and a
flu shot.
But
the limits of the parental option
are self-evident. At age 26, young
workers--especially those who don't
qualify for the tax credit
subsidies--are on their own. In that
light you might view the parental
option as the short-term sugar to
help the long-term medicine of
higher prices go down. Moreover, you
couldn't blame young Obama
supporters like Schreiber for
feeling a little cheated: We helped
change the course of history, and
all we got out of health care was a
lousy price increase.
That
begs the question: Could this
signature accomplishment actually
end up eroding Obama's hold on his
signature voting bloc?
To get
some expert perspective, I put this
question to Morley Winograd and Mike
Hais, authors of Millennial
Makeover, the political class' bible
for understanding the YouTube
generation. They appreciated the
concern I was raising. But they were
pretty confident in predicting that
the health care bill, whatever its
flaws, won't turn off young voters
in any lasting way. They cited two
main reasons: Throughout the
turbulent ups and downs of the Obama
era so far, young voters have
remained the most loyal part of his
base; and millennials are far more
civic-minded than any other
generational cohort and far less
prone to today's zero sum politics.
On the
first point, Hais and Winograd did a
large sample generational poll in
February, and found that millennials
were still far more favorable to
Obama (56% favorable to 36%
unfavorable) than older generations
(split evenly at 46% to 46%). The
same was true on Obama's job
approval, with millennials at 49%
approval to 31% disapproval,
compared with 39% to 46% for older
voters--a swing of 25 points. Hais
pointed out that the poll was taken
at a relative low point for the
president, a few weeks after the
Scott Brown victory. Since health
care passed, Obama has gotten an
approval bump from his base
generally and from young voters in
particular. In one tracking poll,
for example, Obama's approval
ratings among millennials gained 8
points (up to 68% approval to 27%
disapproval).
"In
sum," Hais said, "nothing
millennials have seen so far has
shaken their attachment to Barack
Obama."
Hais
and Winograd were somewhat hesitant
to make any definitive long-term
predictions. But they said the data
from their February survey strongly
suggest young voters will be more
accepting of the likely premium
increases the AP study projected
than one might assume. When asked
whether they preferred a policy
designed to ensure every American
has at a least a minimal standard of
living and income even if it
increases spending, or one that
would let each person get along as
best he can on his own even if this
means some have more than others,
the millennials favored the
egalitarian approach 53% to 29%.
"Millennials don't see things in the
'you win, I lose' context of your
question," Winograd said. "They are
interested in win-win solutions,
which HCR [health care reform] seems
to be from their perspective, i.e.
it creates more equality of access,
pays down the deficit, helps sick
people." It doesn't hurt, Hais
added, that the reconciliation
package Obama signed into law
Tuesday will also dramatically cut
the cost of student loans and make
college more affordable for millions
of millennials. That will only
"strengthen their connection to the
president," Hais said.
I tend
to be a little more skeptical. First
off, higher premiums for younger
workers doesn't seem like win-win to
me, and I suspect more than a few
Young Obamacans will respond
skeptically as well (how many
depends on how big the
burden-shifting gets). Second, Hais
and Winograd seem to be discounting
the context in which this shift is
happening. There's already been a
massive income transfer from young
workers to the elderly in my
lifetime--just consider the $400
billion Medicare prescription drug
program President Bush put on our
credit card. That's only going to
get worse when we finally get around
to rescuing our depleted entitlement
programs and paying down the massive
deficits both parties have run up.
Are
millennials--particularly the ones
that have stuck to Obama like Silly
Putty--totally immune to the
profound issues of generational
fairness raised by these trends?
On the
other hand, I could just be
reflecting the cynical bias of my
generation, which has been
repeatedly stuck with the bill for
the baby boomers' political
excesses. Maybe I am better off
listening to Young Obamacans like
Nils Higdon, another 24-year-old
Chicagoan the AP interviewed. Higdon
was unsure how his peers would react
to ObamaCare. But he himself
"supports the overhaul, even if it
means he will pay more as a young
man to smooth out premium costs for
everyone. "Hopefully I'll be old
someday, barring some catastrophic
event. And the likelihood of me
being old is less if I don't have a
good health plan." Hope, thy name is
Higdon.
Dan
Gerstein, a political communications
consultant and commentator based in
New York, is the founder and
president of Gotham Ghostwriters. He
formerly served as communications
director to Sen. Joe Lieberman,
I-Conn., and as a senior adviser on
his vice-presidential and
presidential campaigns. He writes a
weekly column for Forbes.
