Obamacare Good for Us?

During the “Opening Days” this fall, Harvard’s freshmen orientation week, the Institute of Politics debate over healthcare turned into a lot of mudslinging and grandiose accusations over death panels and government-run healthcare. It’s a shame that we choose to focus on these side issues when a major part of the problem is the fact that 28 percent of people in the 18-24 age group are uninsured, the highest of any group. There needs to be a voice telling students that the current healthcare bill in Congress will have a direct effect on our lives from the day we graduate until retirement. The healthcare system that has been handed down since World War II is certainly broken in many ways, but the current “reform” plans need to be fully examined for their impact on the younger generations.

The central component of the bill is the individual mandate on everyone to buy healthcare insurance. This poses an immediate and steep cost for young people who do not have access to steady income or employer benefits. Harvard’s Student Health Plan, which is required for all students, even those with family health plans, was a product of the current Massachusetts healthcare bill that includes a personal mandate,. Students now incur a minimum of an additional $1000 per year cost added on the term bill, and roughly triple that for those who subscribe to Harvard’s Blue Cross Blue Shield plan. Compared to other groups, like seniors, who are covered by Medicare, and working adults, who might have generous employee health plans, students would be hit hard by the mandate.

The solution from politicians in Washington has been to allow people to be covered by their parents’ insurance until age 26. While this proposal would reduce some the impact of the mandate on the youngest age groups because they tend to be the healthiest and the least prone to high-cost diseases, it is not the cure-all for healthcare that some politicians have claimed it to be. The proposal may actually make sense in the current economic climate—the employment rate for people aged 16-24 has fallen to a low of 51.4 percent. But this number has been falling consistently since its peak in 1989, which suggests that other factors may be influencing its decline, and it is not much different from the total employment rate of 59 percent.

Thus, the extension of healthcare to younger workers, thus, does not do enough to offset the rising costs incurred by young people due to other provisions in the bill. Additionally, the healthcare plan prevents the young from capitalizing on their good health. Factors, including limiting the amount that companies can charge older patients, preventing the denial of coverage based on preexisting conditions, and “community rating”—or price controls—to limit the ability to offer lower costs to lower risk patients, would likely mean that younger workers would have to pay more for their basic healthcare coverage, despite being healthier.

The mandate system would also be unlikely to reduce costs in the healthcare bureaucracy. In fact, the mandate has been shown to sharply increase the number of payers in the system, which artificially drives up demand and prices, as seen by the rising individual costs of Massachusetts healthcare under the state’s current universal plan. Since that reform passed, health insurers have raised premiums between 7-12 percent, greater than the national average of 5-7 percent increases. This makes Massachusetts the state with the highest average family healthcare plans, $13,788 per year, despite the carefully crafted reform bill. Thus, the price control provisions in the healthcare bill should only lead to expectations of greater increases for younger workers.

Another component of the healthcare bill that is potentially devastating to our generation is the burden it places on small businesses. When one thinks of small businesses, one tends to think of mom and pop stores, family operations, and life savings. Yet a recent Kauffman Foundation report indicated that there is a “coming entrepreneurship boom” among people ages 20-34. The Democrats’ healthcare plan would require all small businesses with payrolls over $400,000—around one million employers—to cover healthcare or pay an 8 percent surcharge. This means that the added bureaucracy and taxes of the current healthcare bill will stymie future innovation.

The mandate will strip those who do not feel that they need complete coverage or coverage at the level determined by the government of their rights. Unfortunately, that categorization almost exclusively defines young adults. Policies ranging from community rating to increased equality in healthcare plans will only increase premiums and threaten jobs, while new taxes will disincentivize small business growth. Students should therefore pay greater attention to the reforms being discussed in Washington—for they will directly impact their lives and potentially map out their futures.

James L. Wu ’13, a Crimson editorial writer, lives in Weld Hall.