ObamaCare: intergenerational wealth transfer

Rituparna Basu writes in Forbes that “Obamacare is Really, Really Bad For You, Especially if You’re Young.”  The title says it all, but it’s worth examining in a bit more detail.

“[T]oday’s young people will be tomorrow’s old people,” says Matthew Yglesias of Slate, so while this arrangement may not benefit the young now, it will eventually do so. A senior official at the AARP echoes this sentiment, insisting, “If a younger, healthier person is spending a little more now, it’s okay because at some point they’re going to be a less healthy, older person too.”

The basic premise is that young people will pay more now, but less later. Leaving aside the efficacy of this (our generation could get screwed), one of the largest problems is that you are always one generation behind.  Baby Boomers will get a big break on their health care costs: they didn’t pay extra when they were young, but will pay less now.  So it’s a win-win for them: they got cheap health insurance when they were young, but get young people to pay for them when they are middle-aged.  Their plan for roping my generation into this is to promise to let us fleece the next generation, i.e. people who are toddlers right now.  But even if that happens, the current toddlers will need to fleece the people who will be born circa 2030, lest they end up paying for us when they are young, and themselves in full when they are old.  Once one generation gets a free ride, every subsequent generation has the noxious choice between passing the buck or paying twice.

There are also various problems with the size of generations: as this raises our costs, we will have fewer children, meaning that there won’t be as many people to pick up the tab for us in our middle age years.  Social programmes that heavily tax the young and fertile, for the benefit of those who have already had children, are usually unsustainable.  Paging Charles Darwin!

The other problem is that our generation is already paying twice: Social Security and Medicare won’t be there for us.  The Baby Boomers are hoping that we will agree to be Generation #2 in ObamaCare (i.e. the second generation to reap the benefits), and basically let Generation #3 be screwed the way that we’re screwed with retirement.  As a moral rallying cry, it leaves a lot to be desired, but that does not mean that my generation won’t go for it.

Hey, my generation handed Obama his two wins, so I’m not shedding many tears for our collective selves.  I would just like to not go down with the ship.

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Filed under Economics, ObamaCare

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