Agree with Dan Savage

[politicat]

20. No, you're objectively wrong.

Do the math.

Sorry you don't like actuarial statistics, but it costs far less to insure a young person than they pay, and that overpayment supports the older and sicker people in the risk pool until the younger person becomes older and sicker. This is the BASIS of the ACA. It has always been the basis. It is also the basis of Medicare -- nobody's Medicare tax covers 20 years of care, even if they're maxed out on annual salary from the day they start work at 18 until they retire at 65. The maximum annual Medicare tax rate is $1711 per year ($118K salary per year as of 2016), about $80K in taxation after 47 years of work. Full medical coverage from 65 to 85 on $4000 per year? Nope, not even compound interest works that magic.

Let me walk you through actuarial math 101. We're going to use life insurance first, because it's a discrete defining event: people are either alive or dead. When we buy an insurance policy, we're making a legal bet that we could die in the next X years, and the insurance company is betting that we won't, based on our age and statistical math.

Life and health insurance use similar actuarial statistics. This is why Gerber can still offer $10,000 whole life policies for babies for $78 a year with no increases until the child reaches 21. Over those 21 years, the parents/grandparents pay $1600 if their kid survives and they hand the kid a whole life insurance policy at 21 (which has cash value, unlike term). The now adult child has the choice to cash it or continue paying per the actuarial rates for their age, until the policy reaches face value. The reason Gerber can do this is because only 6.2 babies in 1000 die before age 4; 13 more will die between 5 and 14, and 46 will die between 15 and 19. That means of 1000 children, Gerber will pay out on 65 -- $650,000 -- while collecting $1.6 million. Pretty good bet for them, and it protects the parents if their worst nightmare happens.

For an adult male, age 50, the Social Security actuarial statistics say he has a 0.005 percent chance of dying in the next year, and statistically has 29.5 years left. But every year, his chance of death increases by about .0005 percent, so at 51, it's .0055, then .006 at 52, Then .0065 at 53. So if Mayhew Insurance writes 1,000 policies for 21 years for 1,000 50 year old men, they can expect that 5 will die in the first year, 5.5 will die in the second, 6 in the third, 6.5 in the fourth, 7 in the 5th and so on. Let's say the men are paying the Gerber rate of $6.53 a month, $78/year for 10K coverage. That means Mayhew collects slightly under $7800 the first year (because some of those five die before they've paid their whole annual premium) and pays out $50,000 the first year. Mayhew Insurance has just gone out of business. But if they charge $200 a month, $2400 a year, they're collecting $2.4 million the first year and paying out $50,000 and that's a much better bet.


Health insurance works the same way, except with far more defining events, and it only works if everyone is in the system. Example: 350 million Americans use 1 million cardiac stents per year, most of those performed on people over age 48. The actuarial chances of a 21 year old needing a stent are close to 1 in 3 million, while it's 8 in 100,000 for people over age 48. That's risk pooling, and it applies to everything. Everyone pays according to their actuarial status, not their income. What ACA does is subsidize when income is insufficient, and ACA does that regardless of age. A self-employed 27 year old who chooses the second Silver plan pays the same amount as every other 27 year old, but is so much less of a risk that they pay less than a self-employed 57 year old choosing the same plan. If the 27 year old is making 150% of the FPA, and the 57 year old is also making 150% of the FPA, the 57 year old will get a larger subsidy. But if they both work for the same company and they both choose the same individual policy, they will both pay the exact same amount, regardless of what they make. It may be a different percentage of their income (and usually the 57 year old is making significantly more), but all employees of a given company are charged the same amount for the same plan. Employer based is not allowed to discriminate (including different costs) on the basis of age.

And you're the one who is only interested in your own interests. You're pulling a sexist, selfish argument to support your supposition that is objectively wrong.

Since you don't want to hear me, allow me to send you to another 101, written by a man, because maybe you need a Y chromosome to explain it to you. David Anderson has been writing about this for years at Balloon Juice. Go do your homework.

Good day.