(Bloomberg View) — Politics aside, the success of the Patient Protection and Affordable Care Act (PPACA) exchange system — Obamacare — has always depended mainly on economics: If it can’t attract the right mix of customers, the program is doomed. On this score, the latest figures from the U.S. Department of Health and Human Services (HHS) are encouraging, even if it’s too soon to declare victory.
More young people — who on average are in good health, and who help defray the cost of insuring the sick — are enrolling in Obamacare. Almost 1 million new customers age 34 or younger had signed up for coverage starting Jan. 1, 2016, an increase of almost 50 percent compared with the same period last year. That age group made up 41 percent of first-time enrollees, up from 38 percent year ago.
But the department also announced Tuesday that 8.3 million people in total are enrolled for coverage in 2016 on the 38 state exchanges operated by the federal government, almost 2 million more than at the same point last year. Given that the Congressional Budget Office initially projected that 21 million people would be enrolled by this point, it’s hard to say the program is going according to plan.
Nonetheless, getting more young people to sign up is crucial. Youth is a proxy for cost: Because people in their 20s and early 30s generally use fewer medical services than those who are older, their participation helps keep per-person expenses — and, by extension, premiums — down.
True, the failure to sign up young people wouldn’t by itself cause Obamacare to fail. The program partially reimburses insurers that lose money on the exchanges, and federal subsidies help defray the cost of higher consumer premiums. But a failure to attract young, healthy customers would make Obamacare more expensive to taxpayers.
It’s not clear what’s driving young people to sign up in greater numbers. One incentive is probably that the penalty for being uninsured will increase next year to at least $695. Or maybe they’re realizing that coverage isn’t as expensive as they thought. At any rate, this development diminishes the danger that state exchanges will collapse under the weight of lopsided risk pools, rising premiums and declining consumer demand.
In any case, the White House can’t afford to get complacent about Obamacare. The trend of rising copayments, deductibles and other out-of-pocket payments remains a concern with exchange coverage. But the most lethal threat to the viability of reform — a dearth of youngsters with any interest in health insurance — appears to be subsiding.
—Editors: Christopher Flavelle, Michael Newman.
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