When insurance companies began pricing their Affordable Care Act policies in 2013, younger Americans were left holding the short end of the stick. True, young adults ages 18-to-25 were the first demographic to benefit from the 2011 phase-in of the health care law, which allowed adult children to remain on a parent’s policy. Some 2 to 3 million young adults joined the ranks of the insured under that provision. But policies for older Millennials and those without an insured parent were often priced comparably or higher than before Obamacare, even after factoring in federal subsidies. As Forbes columnist Scott Gottlieb put it, “Obamacare is asking young adults to effectively subsidize the healthcare costs of older Americans.” Looking at premium prices alone, young Americans seemed to have gained relatively little from the new insurance exchanges.
To gain broader perspective on the generational equity of Obamacare, it is helpful to place Marketplace subsidies in the context of the nation’s entire social safety net. In a previous post, I detailed how ACA subsidies compare to other entitlement programs in terms of average monthly benefit and total cost to taxpayers. To recap, the average Marketplace subsidy of $268 per month is a modest benefit relative to other programs, such as unemployment insurance, Social Security, Medicare, and Medicaid, which spend $800 to $1,500 per beneficiary per month, on average. Moreover, with a total annual cost of $30 billion, Obamacare subsidies are adding less than 2% to the total cost of America’s social welfare system.
Generational issues come into focus by ranking the various social programs according to age of beneficiary, as in the first two graphics below.