A "Young Invincible" Worries About Health Insurance

Insurance people often talk about a group of the uninsured they call "the young invincibles"...young, healthy people, usually in their early- to mid-20's, who don't buy health insurance because they don't believe they need it. The insurers' pitch is that forcing all these young, healthy people to purchase health insurance coverage will solve the health insurance crisis.

The reasons, they say, are twofold: first, these young folks (mainly young men, the legends have it) are leading candidates to wrap their cars or motorcycles around a tree, fall off a hang-glider or bungee-jump into a canyon and bust their skulls on a rock, thus requiring extensive treatment for trauma for which they don't now have coverage; more prosaically, they tend to pay more in premiums than they use in benefits, and therefore are very profitable for the insurers, and so (the pitch goes) they add cash to the "risk pool," which somehow helps keep costs down for everybody else.

Set aside for the moment that, as usual, there's almost no objective third-party research which would indicate that any of this is particularly true or likely, except that young males are slightly more prone than average to experience an auto accident.

The fact is that young people who HAVE their own health insurance are far from worry-free, for the same reasons their elders worry about their own non-group health insurance.

When our son "aged out" of our group health plan, we helped him find his own individual health insurance coverage. He was 23 and in good shape, healthy lifestyle, the ideal young insurance customer. We found him a decent plan for about $125 a month. He was a college student, and now works only part-time, but he keeps up with his premium payments.

Except he's afraid to use his plan.

He's very concerned that while he may be healthy now, he could develop a chronic health condition, like his cousin. When he was diagnosed with a chronic
gastrointestinal disorder, his cousin's health insurance premiums quadrupled because, unlike with group coverage, there are no limits on how much insurers can raise the rates of individual customers based on their health.

And when his cousin tried shopping for coverage elsewhere, he found that his health condition rendered him "uninsurable" by any other insurer. So he bought a cheaper plan which featured a $5,000 annual deductible and which didn't pay out a dime in benefits till the deductible had been reached. And instead of paying $400 per month out of pocket for prescription coverage, he bought his medication on-line in Mexico for $55.

Ultimately, facing cancellation of his coverage, his cousin changed jobs so he could be covered by a large company's group health plan.

The advocates of "consumer-directed health plans (whatever they are)" like to say that high deductibles and co-pays make consumers less likely to "abuse" their health plans. But the best research shows that such individual health plans generally produce short-term savings for insurers when their customers put off necessary treatment or medication is too expensive to pay for on lower-wage jobs.

Our son looks at his current health insurance policy as a "placeholder" till he can find a job with group health insurance coverage.

Insurers, especially those who sell a lot of non-group health plans, like to tout the contention that "individual responsibility," which for them means dividing the world into actuarial universes of one, and selling each person a "custom-tailored" and individually-rated health policy, will somehow reduce net spending on health care services.

The reality is that in general, non-group coverage costs more, covers less, and is much less stable and reliable than any sort of group plan. And anybody covered by one knows he or she is just one illness or accident away from either dramatic increases in premium or outright cancellation of their health plans.

They are, however, extremely profitable for insurers, because until they experience that illness or injury, these "young invincibles" pay in far more in premiums than they take out in claims. Which means that insurers can either a) use the surplus to subsidize health coverage for everybody else, or b) keep the money.

Want to bet what really happens?