Funding reform on the backs of the young
By Michael Gerson
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Published: November 4, 2009
WASHINGTON — As I was talking recently with the founder of a large American corporation, the conversation turned (inevitably) to health care reform. His employees in their 20s, on average, cost the company about $1,500 a year in health bills. Those in their 50s cost at least 10 times more. The effect of proposed health care reform — which limits the ability of insurers to charge higher premiums for older adults — would be, he said, a large shift of America’s health care burden to the younger generation.
This is not an unintended consequence of reform; it is the whole purpose. It is not a side effect; it is the main funding mechanism.
Precisely because younger people have lower health costs, reformers want to draft them into the broader health insurance system so their premiums can subsidize the health expenses of older, sicker health care consumers. Thus, in every version of health care reform, the young are required to purchase coverage, on penalty of an "excise tax.”
This mandate explains the political coalition behind health care reform. Insurance companies are willing to accept tighter government regulation on matters such as the coverage of pre-existing conditions — but only if they are given guaranteed access to millions of younger, healthier premium payers. Congress gets additional resources from the young to expand insurance coverage, with less need to raise taxes overtly. Advocates for the elderly welcome an intergenerational subsidy that reduces premiums for older Americans.
Legislators seek to soften the blow in a couple of ways. The
Senate Finance Committee bill would allow insurance companies to charge older adults a maximum of four times more than young people — reducing premium increases for the young by making the elderly carry more of their own weight. The House bill would set the maximum premium difference between old and young at two to one. This provision, supported by
AARP, is likely to increase premiums for the young dramatically.
The House and Senate bills also provide subsidies for those with low incomes to make health insurance more affordable. Many of the young would qualify. Many would not. Offsetting the whole cost to the young through subsidies would make health reform fiscally unsustainable.
There are arguments for mandating the purchase of higher-priced insurance by the young. But this burden on the young comes in a series. The most consequential element of the New Deal — Social Security — has been a large transfer of resources from young to old. The same is true of the Great Society’s
Medicare program, which has channeled massive spending toward health care for the elderly. Two-thirds of
Medicaid spending goes to nursing homes. In 1965, there were four workers paying for the benefits of each retiree. Soon, there will only be two.
In our history, public programs helping the young tend to be discretionary and temporary. Entitlements benefiting the elderly are eternal. And health insurance reform adds to the list.
Cross-generational wealth transfer
America’s 60-year, cross-generational transfer of wealth counts moral achievements. In the 1960s, 30 percent of the elderly lived in poverty. In 2008, that figure was less than 10 percent. And the compassionate treatment of the elderly serves our future interests. The young grow old, with a little luck and patience.
But limited resources require the interests of young and old to somehow be balanced. And a society that consistently shifts burdens from old to young at some point becomes selfish. We are proud to sacrifice for the sake of our parents and grandparents. We are less proud of imposing burdens on our children and grandchildren that diminish their opportunity.
This is the inescapable shame of overwhelming budget deficits. But it applies to health care as well. A nation that views the young as ripe for burdens instead of benefits has itself become old.
WASHINGTON POST WRITERS GROUP
Related Topics:
Culture and Lifestyle,
Health and Fitness,
Domestic Policy,
Social Policy,
Aging and the Elderly,
Political Policy,
Special Interest Groups,
Politics,
Social Issues,
Business,
Personal Finance,
Health Care Policy,
Health Care Issues,
Paying for Health Care,
Insurance,
Health Insurance,
Health Care Reform
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With minimum wage being almost 10 times that now you can see how those in my age group and older who were paid even less than I, have it hard.If it weren't for getting lucky with having oil wells I don't know how I'd make it. I pay my own way plus. I thank God! Inflation is an enemy.
1. People are becoming independent from their parents at a later age.
2. People are becoming increasingly dependent on government assistance.
3. Multi-generational households are increasing. Not because the generation in their prime are taking care of their aging parents. Rather, the generation in their prime are still dependent on their aging parents.
How can the productive members of the younger generation pay for all this, when an increasing number of their peers can't stand on their own two feet?