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New health insurance exchanges want young, healthy people

Older and sicker Californians are likely to be first in line for guaranteed health coverage as the state's new insurance market opens Tuesday as part of the landmark healthcare law.

Like shoppers queuing up for bargains on Black Friday, people such as 52-year-old James Craig, an uninsured day laborer, say they can't wait to get their insurance cards.

"I think Obamacare is the greatest thing ever," said the Los Angeles resident, who said he suffers from high blood pressure and hasn't seen a doctor in years.

However, the program's long-term success will largely depend not on those who need healthcare the most, but on those who need it the least: young people.

Full coverage: Obamacare rolls out

The math of President Obama's Affordable Care Act works only if millions of healthy consumers start paying into the system to offset the bills racked up by sicker people who can't be turned away.

Persuading twentysomethings won't be easy. Max Halpern, a 25-year-old San Diego law student, is healthy and doesn't spend much time worrying about his next doctor's appointment.

In November, when he turns 26, he'll no longer be covered by his mother's health plan. The new law mandates coverage for most Americans, but the penalties for opting out can be cheap — less than $100 in some cases. Halpern said he wants to see what Obamacare costs him before signing up.

"I can see why some young people would shy away," Halpern said.

The stakes are high. Nationwide, the Obama administration estimates it needs about 40% of the 7 million people expected to enroll the first year to be young and healthy to help mitigate the costs of the chronically ill.

In California, about 31% of people ages 18 to 34 are uninsured, compared with 27% nationally. The figures are even higher in Los Angeles, where nearly 40% of young adults lack coverage.

"If healthy people don't enroll, insurers will start to increase premiums," said Christine Eibner, a healthcare economist at Rand Corp., a Santa Monica think tank. "It could create a death spiral where only sick people want to sign up."

To get young people into the fold, the Obama administration is running an online video contest soliciting entries about young people and their medical needs. In California, officials are spending millions of dollars on advertising and outreach aimed at showing them the value of coverage. One pitch: You could go broke without it.

One video spot focuses on Ajay, a 20-year-old uninsured student from Sacramento, who talks about how expensive out-of-pocket treatment can be for her asthma attacks.

"As young people we often feel nothing can stop us," she says, sitting in a coffee shop. "But all it takes is a fall or some kind of accident."

Outside groups are also nudging young folks to get with the program. On Saturday, Young Invincibles, a national advocacy group that backs the healthcare law, helped host a music festival in South Los Angeles to educate young people about Obamacare and answer questions.

Between acts they put on a skit showing how a torn Achilles tendon from a pickup basketball game could result in thousands of dollars in medical bills for someone lacking coverage.

Chino Hills resident Vincent Hennerty, 23, said he's already learned the hard way. Three years ago, a case of poison oak landed him in the emergency room, triggering a $900 bill that he couldn't pay. He was hounded by bill collectors and had to seek help from relatives. Currently unemployed and uninsured, he's eager to find out whether he qualifies for low-cost insurance.

"That was a lot of stress, and I never want to go through that again," said Hennerty, who recently graduated from UCLA.

Insurance rates for young people will vary widely. Those with good incomes and who live in areas with higher medical costs could pay considerably more than they would in the current market. For instance, a 30-year-old in San Francisco earning $50,000 a year would pay roughly $300 a month for a mid-level Silver plan in the exchange.

That's because new federal rules limit what insurers can charge based on age. The young, in effect, are to subsidize the old to a greater degree.

Some experts fear that too many will skip coverage and opt to pay the penalties, which are minimal in the first few years. In 2014, people who don't have health insurance face a penalty of $95 or 1% of their income, whichever is greater. Those fines do increase over time, hitting $695 or 2.5% of income by 2016.

Still, many younger people will qualify for health insurance at little or no cost. Because of their lower incomes, many stand to benefit from premium subsidies in the healthcare law and they may even qualify for no-cost coverage through Medicaid. The state is trying to enroll more than 2 million people in subsidized private coverage or Medi-Cal by the end of next year.

People under 30 can also qualify for a bare-bones catastrophic plan at a lower cost. In Massachusetts, which introduced a similar healthcare expansion in 2006, enough young people showed up to keep rates stable, researchers found.

Speaking in Los Angeles in August at a healthcare town hall, Peter Lee, executive director of Covered California, the state insurance exchange, touted affordable options.

Lee cited the hypothetical example of a 27-year-old man in Long Beach who earns $31,000 a year. That policyholder could get a mid-level Silver plan for as little as $184 a month and face no more than $6,350 in out-of-pocket medical costs.

Some audience members questioned whether a young person would be willing to pay that much. But Lee defended it as a good deal.

"We haven't made healthcare free, but we feel good about having affordable options," he said.

The federal law has already had an effect on coverage for some young people by allowing them to stay on parents' coverage until age 26. More than 3 million young people nationwide have taken advantage of that option.

Enrollment on Tuesday and in the first few weeks may be low because coverage under the federal healthcare overhaul doesn't begin until Jan. 1 at the earliest. As the rollout begins, there are concerns about glitches with California's online enrollment system and whether the state has enough enrollment counselors ready and trained.

But some gentle nagging from Mom could make all the difference. Annette Halpern says she worries that her son Max, the San Diego law student, will get too busy and put off making a decision. Enrollment in the state exchange lasts six months, ending March 31.

"I'm wondering how many of his generation are procrastinating and not doing their homework," she said. "I don't want to be too much of a helicopter parent."

chad.terhune@latimes.com

Twitter: @chadterhune

Copyright © 2014, Los Angeles Times
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