Tag: young adults

Matt Yglesias Cools Out the Marks

Ben Smith has a mostly excellent piece titled, “Obama Prepares to Screw His Base”:

[T]he health care overhaul known as ObamaCare [is] calculated to screw his most passionate supporters and to transfer wealth to his worst enemies.

The passionate supporters are the youth, who voted for him by a margin of 60% to 36%, according to exit poll samples of people 29 and under. His enemies are the elderly: Mitt Romney won 56% of the votes from people 65 and over…[W]hat follows may come as an unpleasant surprise to many of the president’s supporters. The provisions required to make any sort of health insurance plan work — not just ObamaCare, but really any plan of its sort — require healthy young people to pay more in health insurance than they consume in services, while the elderly…consume far more than they pay in…[T]his year will be spent laying plans to shift the burden further toward the young…

And so this vast transfer or resources from young to old — just the latest in a long line of these transfers — hasn’t been discussed much because it is totally uncontroversial.

The piece falls shy of totally excellent because Smith incorrectly asserts, contrary to the economics literature, that young people have to subsidize old people for health insurance markets to work. Smith correctly notes that ObamaCare screws young people, but thinks that’s unavoidable, if unfortunate. Since there’s no reason to screw young people at all, ObamaCare is even worse than Smith portrays it.

But Matt Yglesias takes the cake. ObamaCare does not screw the young, he writes. Sure, millions of young adults will pay more for health insurance, even after accounting for ObamaCare’s subsidies. But young adults shouldn’t sweat the triple-digit premium hikes ObamaCare forces them to pay solely for the benefit of subsidizing older people who have more resources than they do. Why? Because today’s young adults will benefit later when ObamaCare does the same for them at the expense of subsequent generations. You know, if they don’t die first. What could go wrong?  

Social scientists have a term to describe the role that people like Yglesias play in a confidence game. It’s called “cooling out the mark.” In his classic 1952 article, sociologist Erving Goffman explains. See if you can find any similarities:

The confidence game – the con, as its practitioners call it – is a way of obtaining money under false pretenses by the exercise of fraud and deceit…

The typical play has typical phases. The potential sucker is first spotted and one member of the working team (called the outside man, steerer, or roper) arranges to make social contact with him. The confidence of the mark is won, and he is given an opportunity to invest his money in a gambling venture which he understands to have been fixed in his favor. The venture, of course, is fixed, but not in his favor. The mark is permitted to win some money and then persuaded to invest more. There is an “accident” or “mistake,” and the mark loses his total investment. The operators then depart in a ceremony that is called the blowoff or sting. They leave the mark but take his money. The mark is expected to go on his way, a little wiser and a lot poorer.

Sometimes, however, a mark is not quite prepared to accept his loss as a gain in experience and to say and do nothing about his venture. He may feel moved to complain to the police or to chase after the operators. In the terminology of the trade, the mark may squawk, beef, or come through. From the operators’ point of view, this kind of behavior is bad for business. It gives the members of the mob a bad reputation with such police as have not yet been fixed and with marks who have not yet been taken. In order to avoid this adverse publicity, an additional phase is sometimes added at the end of the play. It is called cooling the mark out. After the blowoff has occurred, one of the operators stays with the mark and makes an effort to keep the anger of the mark within manageable and sensible proportions. The operator stays behind his team‑mates in the capacity of what might be called a cooler and exercises upon the mark the art of consolation. An attempt is made to define the situation for the mark in a way that makes it easy for him to accept the inevitable and quietly go home. The mark is given instruction in the philosophy of taking a loss.

So remember, young voters. ObamaCare doesn’t screw you. ObamaCare is good for you.

See you next time.

ObamaCare: Still a Bad Deal for Young Adults

The Associated Press reports that young adults will face higher premiums under ObamaCare:

Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press. The analysis did not factor in tax credits to help offset the increase.

The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.

The article cited additional studies estimating premiums increases young adults as high as 50 percent. That was essentially the message of my recent Cato briefing paper, “ObamaCare: A Bad Deal for Young Adults.”

Supporters claim the new law provides subsidies that would help people afford the higher premiums. As I write in my paper, however:

The money for those subsidies has to come from somewhere, though. Presumably, some of it would come from young adults themselves in the form of higher taxes or the tax penalties imposed on those who do not purchase insurance…So the presence of subsidies does not necessarily mean that young adults would come out winners. Ironically, all the complexity may actually help the legislation pass Congress precisely because it obscures whom the legislation would tax.

Supporters also claim that although the higher premiums might be actuarially unfair for people who are young and healthy today, those people will eventually be old and unhealthy. Over the course of a lifetime, they reason, such policies would be closer to actuarially fair.

The problem is that we’ve heard this line before. Inter-generational redistribution is fundamentally unfair to the young because it creates a situation where the old, who vote, have incentives to ratchet up benefits – and to ratchet up taxes on the young, who don’t vote. Social Security collects from the young and gives to the old, and is clearly a net tax on the young. As Jonathan Gruber reports, the young have very little confidence – deservedly so – in Social Security’s implicit promises. Experience shows that whatever new taxes ObamaCare imposes on the young will grow over time.

Regardless, most young uninsured people already obtain insurance as they get older. As I report in my paper, 30.4 percent of those age 20-29 were uninsured in 2008 (including 33.8 percent of 23-year-olds), but only 13.4 percent of those aged 50-64 years were uninsured. So a significant number of uninsured young adults naturally transition into insured older adults. The main effect of the new law will be to take young adults who think health insurance is a bad deal at today’s prices and force them to health insurance at even higher prices.