'victimization' of young invincibles by Obamacare largely exaggerated

[Bill USA]

Jimmy Kimmel had a bit on his show about "young invincibles" paying for penis - pumps presumably for elderly policy holders. Actually, this comic piece wasn't that much more ridiculous than most of the news coverage insinuating the victimizartion of the young 'invincibles'. Mark Twain once said: "the rumors as to my death have been exaggerated." ... I would point out that the narrative of the victimization of the young 'invincibles' is exaggerated.

All these 'plot-lines' presume as if all the medical expenses paid out by insurers for policy holders is covered by current revenues (premium payments by policy-holders). That is not close to being true. The insurance companies make a profit every year which is on top of additions to an investment account from current revenues. The insurance companies make every effort to make this pool of assets grow over time and it is from these accumulated investment assets that payments for medical claims are made.

Now, it's true that young people have a considerably lower medical expenses claims rate compared to people of advanced age. But it's also true that those 50 to 60 year olds who have had insurance for 25 to 35 years and have been paying in premiums over that period have contributed 25 to 35 years to that asset pool the insurance company maintains (and tries very hard to grow) from which medical expense claims are paid. And how much have the typical young person paid into that asset pool? Well, about 1/20th to 1/30th as much as the more mature policy holders - and that's on a cash basis. If you allow for a present value calculation of the older policy holders 25 to 35 years of payments it would be an much larger disparity.

While the older policy holders have a higher rate of claims, they have paid in a great deal more than the young 'invincibles' to that invested assets pool. The young policy-holders - if they should have the misfortune to make a sizeable claim (unexpected serious illness, or injury) even though they have not paid in very much to that invested assets pool they will have the entire amount of the approved claim paid. That's actually a pretty good deal... despite the narrative of young invincibles being 'victimized' by Obamacare - oh, and it's not Obamacare that's responsible it's the reality of running an insurance business model. (the way in which Obamacare changes the equation is by eliminating the "pre-existing conditions" clause in private insurance company policies. The private insurance model has to have the Pre-existing condition clause in there because most people think just like the young 'invincibles' are currently thinking regarding they purchase of insurance - "What ME ....buy insurance??? ... I think I'll just wait until I need it" (!?).


http://www.mediaite.com/tv/kimmels-new-obamacare-ad-shows-how-young-invincibles-end-up-paying-for-the-elderlys-penis-pumps/

[Thinkingabout]

1. K & R Very good point.

Somewhere when the bill is fully implemented there will be wins on all sides. It is like the water bucket brigade, a full bucket gets passed down the line with the end desired result at the end of the line. Somebody somewhere took care of the young ones until they were old enough to make it on their own, are they planning to pay their debt when earning money? Might sound cruel but this deal works both ways.