The choice facing many young people: Buy insurance or pay the fee?

The New York Times today analyzes the decision facing many young people as the Patient Protection and Affordable Care Act (ACA) comes online: Is it in my economic best interest to buy insurance through the exchange, or should I go without insurance and pay the penalty? The Times worked with Milliman to examine this question given a range of possible scenarios. This infographic summarizes our findings:

Comparing_ cost_of_3_conditions

This excerpt helps explain the analysis:

Consider a young uninsured man living in New York City who earns $50,000, which means his income is slightly too high for subsidized coverage. If he received treatment for his back, he would, on average, be billed about $4,890 in 2014, according to an analysis conducted by Milliman, a consulting and actuarial firm, using data from the latest Medical Expenditure Panel Survey. That includes the cost of treating his back, as well as other typical medical and prescription expenses during the year. Add in the $400 penalty, and his total outlay for the year reaches about $5,290.

But if he bought the silver plan with the cheapest premiums on the New York health insurance exchange, his overall costs would be slightly less, or $5,133, according to Milliman’s analysis. That includes about $4,311 in annual premiums and $821 in out-of-pocket costs. (Again, a young person may pay even lower premiums in other places).

A catastrophic plan, which has high deductibles and low premiums, purchased on the New York exchange would cost the young man with a compromised back $4,940, still less than remaining uninsured (about $2,200 in annual premiums and nearly $2,740 in out-of-pocket costs). Catastrophic plans, which are available to people under 30 or those suffering a hardship, generally require that you shoulder all of your medical costs until you meet the hefty annual deductible.

But there are instances where the uninsured young person — even one with a medical ailment — could potentially pay less. Milliman estimates that a young person with asthma would incur medical charges of $2,200 a year, or less than half the cost of buying the cheapest silver plan in New York.

Of course, landing in the hospital even for just a few days — about $11,600 a night for a medical or surgical stay, Milliman estimates — could push any person, young or old, to the financial brink, though a consumer could potentially negotiate those rates down…

There are still millions of people who are expected to pay the penalty and take their chances. “Getting struck by lightning is an insignificant risk,” said Stuart D. Rachlin, a principal and consulting actuary at Milliman, who calculated that the average American under the age of 65 had a 10 percent chance of incurring more than $30,000 in medical charges, including drugs, in a year. “To me, a 10 percent risk is a meaningful possibility.”

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