WASHINGTON — The conventional wisdom is that young adults, the so-called young invincibles, will prove the hardest demographic to sign up for coverage under President Barack Obama’s health-care law.
But one market research firm recently completed a survey of more than 3,500 uninsured Americans that shows young adults might actually be the easiest recruits.
“I think the fear that the risk pool is going to be very sick people is unwarranted,” said Richard Hamer, managing principal at Minneapolis-based Deft Research. “I think a lot of studies show that the main obstacle is affordability, and that just won’t be as much of an issue with younger people.”
The Obama administration has made no secret of whom it wants to sign up: the young and healthy. These are the people who tend to have the lowest health-care costs — and they are why the White House is taking meetings with people from Web sites such as Funny or Die, encouraging them to promote the law.
The concern for months has been that young people won’t sign up for health insurance. The reason the White House needs them — their low health-care costs — is the same one that could make them the least likely demographic to purchase health care.
Deft Research, in conjunction with the consumer information site HealthPocket, surveyed 3,584 uninsured people in an effort to determine whether that was true.
“Our objective was to figure out who is most likely to buy,” Hamer said. “The first year’s tax penalty isn’t that high so there’s not much of a penalty. So we asked a series of questions about attitudes toward health insurance.”
Among the questions they asked the research participants: “If you were considering health insurance for next year, and these two options were your only choices, which would you be most likely to choose?”
Choice A was a health plan that came with an average premium of $320. For those who earned less than 400 percent of the poverty line and would qualify for financial assistance, they were given the subsidized price.
Choice B was not buying health coverage and paying the $95 tax penalty.
They found that young adults with lower incomes were the most likely to say they would go with Choice A.
Hamer thinks this is true for several reasons. First, young adults will face lower premiums in the health insurance marketplace than older buyers if they are purchasing coverage without a subsidy. Insurance companies are allowed to charge older subscribers three times as much as younger enrollees. That average $320 premium becomes $195 for an 18-year-old — and $598 for someone in their 60s.
“As you become older, the premiums become a lot more expensive,” Hamer said. One important caveat: People who use tax credits to purchase health insurance will have their premium contribution capped as a percentage of income, which could make the base premium less relevant as a price point.
The same thing happens as you move up the income scale: Subsidies for someone at 200 percent of the poverty line (about $23,000 for an individual) are going to be significantly greater than for someone earning $10,000 more and hovering near 300 percent of the poverty line.
The enrollment “sweet spot,” Hamer expects, will be young people who earn less than 250 percent of the poverty line.
“When you think of a 60-year-old facing a $350 bill, that’s a big change in your household budget,” Hamer says. “That’s not going to be what younger, lower-income people face in the marketplace.”
One big factor that could intervene are health-care costs: Older people might decide a higher premium was acceptable if they expected to have really high health-care costs in the coming year. And, in Deft’s research, 77 percent of the most likely buyers expected to use their plan in the next year, compared with 6 percent of those who were least likely to purchase coverage.