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.
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