Obamacare: What College Students Should Know

The health care wars raged on last Thursday as President Obama made an appearance at the University of Maryland in College Park to rally support for his reform plan. It was a typical campaign-style speech, almost 40 minutes long, in which Obama talked about student loan reform and Pell Grants (to roaring applause) before diving into the health care debate.

The rally was an attempt by Obama, as the Washington Post reported, "to tap his richest vein of support -- voters younger than 30 -- to help sell his reform plan to a more skeptical general public." A recent article by Politico discusses how the health care debate has not ignited the young in the same way that the 2008 election did, and the New York Times discussed how the politics of age-gaps and disinterest may keep young voters away from the polls and swing momentum in the 2010 election.

In his defense of the public option, which was met with wild applause, Obama said the following:

"I've also said that one of the options in the insurance exchange should be a public insurance option. (Applause). Let me be clear, it will only be an option. No one would be forced to choose it. No one with insurance would be affected by it. But what it would do is provide more choice and more competition and put pressure on private insurers to make their policies affordable and treat their customers better. Now think about it. There's some folks who say well this is a government take over of health care. We've got public universities, private universities, nobody says that we're taking over private colleges! What we're doing is giving students a choice, you should have the same choice the same way in your health care."

The comparison of the public option to public universities is not a good one. Unlike health care companies, public universities are non-profit institutions. They were established to broaden academic fields, not to stir competition and lower prices among their private counterparts. Recent research from the Lewin Group claims that at least 103.4 million people would "transition" to the public option within the next several years, many from private and employer-provided plans. Though Congressional Budget Office estimates differ from the Lewin Group's, it is clear that moving people to the public option could raise costs for those who remain in the private insurance pool (see my prior analysis on The Cram here). Public and private universities do not share a similar relationship.

Obama also said, "Since our plan will make sure that insurance is affordable for everybody, we're going to also say everybody needs to get insurance. Because if there are affordable options and people don't sign up, then the rest of us pay for somebody else's expensive emergency room care. And that's not fair." An individual mandate would address the nearly 30 percent of Americans under the age of 25 without health insurance, mostly because they don't want to buy expensive coverage and believe they are too young and healthy to need it.

Health care reform could shrink this gap if it lowered costs and provided minimal coverage tailored to young people, yet "essential benefits" regulations in the reform bills would establish a set of required benefits to be included in every policy sold. Studies have shown that these regulatory structures only make health insurance more expensive (an interesting article from 2008 in the Wall Street Journal compares the prices of insurance in heavy-regulation New Jersey to low-regulation Kentucky). While provisions to allow children to stay on their parents' plans into their 20s may help, if health care reform fails to lower prices, the individual mandate may hit young people the hardest.

The more centrist bill recently approved by Sen. Max Baucus' Senate Finance Committee tries to settle this fear. His plan also has an individual mandate, but it would allow young people to buy "young invincible" plans -- cheap plans that cover only catastrophic medical calamities. Timothy Noah in Slate blasts this plan as a profitable "sop to insurers" and notes that "everybody else gets screwed." The "young invincible" plan seems like a better idea to me than creating a laundry list of benefits that the young are forced to buy, including rehabilitation, maternity care and substance abuse services (as written into H.R. 3200). It also addresses a drawback of "community" rating, which requires insurance companies to charge similar prices to all -- without allowing young, healthy people different options, they could end up subsidizing the old and sick.

To be fair, there is an argument to be made that drawing healthier crowds out of the larger insurance pools may increase costs for older policy-holders. Others argue that the impact on the larger insurance pools would be negligible, and the WSJ points out that Massachusetts now offers a similar plan in its health care reform effort.

Obama closed out his speech's call for reform by saying, "Just like the change that began in our campaign, it starts with people -- especially young people -- who are determined to take this nation's destiny into their own hands." Giving young people an affordable system that accounts for their unique needs is crucial, and the Baucus bill is a step in the right direction with its inclusion of the "young invincible" plan and exclusion of an intrusive public option, though the "essential benefits" package should be given a second look. Such proposals could rally young people around a change in health care just in time.