Monday, October 28, 2013

It's not insurance, it's a co-op

Why Obamacare will ultimately fail. Because it's really not an insurance business model. It's more of a Co-op.

Here's a great piece explaining it here............

Experts say that young, healthy people must enroll in ObamaCare’s health exchanges to cover the cost of insuring sicker, older people. It’s a simple math equation: Charge everyone roughly the same rate for access to basically the same product. The people who use it less will subsidize the people who use it more.

The problem with this plan is that it hoses young, relatively poor people like me right when we least need high bills for services they’re not using. And it helps older, relatively rich people who should be able to afford the care they need. If America’s downtrodden and struggling young people are smart, they’ll opt out. Then it’ll be up to the federal government to fine them enough to make up for the shortfall.

First, let’s look at the math. As Nick Gillespie and Veronique de Rugy have pointed out for Reason magazine, the concept of today’s older generation as impoverished is simply wrong. 

In fact, today’s seniors are far wealthier than today’s young adults.

Looking at rates of homeownership, 83% of elderly households own a home. Meanwhile, 36% of millennials are still living under their parents’ roof. Those over 65 years of age have much lower poverty rates than most other demographic groups. Households headed by people 65 or older have 22 times the wealth of households headed by people under 35.

For a while, whenever I would see a buddy of mine (an executive of a Fortune 500 company), I would buy him a beer and thank him for subsidizing my healthcare.

But I totally had it screwed up, I should be going to night clubs and thanking all those young thirty year old baristas for subsidizing my healthcare.


1 comment:

scot said...

You miss the relationship here. The young pay for a plan which is subsidized by a tax on the wealthier taxpayers. The young persons plan itself subsidizes the insurance of the older individual but there is also no subsidy to support the now lower premium. It actually has a very nice relationship.