I just read a piece on the HealthyStates. org site that summarized a roundtable discussion about how to get young adults to sign up in health care programs. One of the people suggested a break on student loans in order to incentivize health insurance enrollment.
According to the author, Chris Farrell, it was a popular suggestion among the group. Farrell then contacted two experts who have both explained why such a solution wouldn’ t be feasible. It seems to me, though, that the notion of the break on student loan repayment in order to encourage health insurance enrollment pretty much does not show for the big picture. And if we dig a little deeper, maybe there could be the workable marriage of these two uglies.
Insurance plan Exchanges Need Young People
In order to balance out the costs of insuring older and less-healthy individuals, the companies participating in the Affordable Care Act’ s (ACA) mandated insurance exchanges need more young, healthy enrollees. The insurers therefore need the particular so-called ‘ Young Invincibles’ — who have largely eschewed enrolling in health care insurance options — to join the programs and lower the underwriting guidelines, and ultimately, the cost-per-individual of medical health insurance.
Student Financial debt Is One Obstacle to Health Care Registration
At the same time, students today are leaving school with an typical loan debt of almost $30, 000 and graduating at one of the highest levels in history — although, graduation rates are lower than traditional figures, record enrollment levels cause a huge number of graduates. This is occurring in an environment where jobs are usually less plentiful and median salaries are lower than they were less than a decade ago.
So , our Young Invincibles are likely to face a substantial financial conundrum: use a meager income to pay the monthly student loan payment or enroll in the mandated medical care programs. If the grad has been fairly healthy and has no reason to see a doctor, and in light of the animal penalties for student loan default, young people are going to tend toward student loan obligations if their financial choice comes down to medical care versus college debt.
The Federal Government Makes Billions From Student Debt Interest
In the last fiscal year, the federal government booked more than $40 billion of revenue in excess of expenses — exactly what many would call “ profit” — on the servicing of education loan debt. The $41. 3 billion dollars profit for the 2013 fiscal yr is down $3. 6 billion dollars from the previous year but it is a higher profit level than all but two companies in the world: Exxon Mobil cleared $44. 9 billion in 2012, and Apple cleared $41. seven billion, according to a USA Nowadays report.
[Read more about Federal Student Loan Profits HERE ]
The particular numbers track the entire fiscal yr that ended Sept. 30, 2013. They come as concern continues to install about the level of indebtedness by college students and graduates. Estimates show over $1. 2 trillion in education loan debt across the nation, more than the nation owes on credit cards.
I would guess — and I possess little evidence to back this up — that if an uninsured grad got sick, the balance among paying for health care costs, if not courage, would quickly tilt against producing student loan payments. Moreover, if medical care issues prevent a young adult from working, she is unlikely to be producing student loan payments at all. Either way, the person becomes a public problem: whether simply by failing to pay student loan debt or by becoming a burden on the open public health system — one of the problems that the Affordable Care Act (ACA) purports to help resolve.
So , if we’ re going to mandate health care coverage — even for those tied to a colossal point of college debt — why not connect the two together? The Dept. of Education could create an insurance coverage pool out of people paying student loans, and use a portion of the $40 billion in annuall revenues that will exceed expenses — whether we all call them profits or not — to subsidize a portion of the premiums. The premium costs themselves could even be amortized and rolled into the loan payments.
It would be like an FHA loan, in which mortgage insurance coverage is rolled into the loan upfront and amortized over its living. This would help not only to protect the particular government’ s investment in individuals’ education, it would help to protect these investments by keeping college grads healthy, productive members of the workforce.
If this were to occur, student borrowers would automatically end up being included in insurers’ loan pools. A good influx of young, healthy insureds would drive down the cost per individual of health care coverage and reduce the particular taxpayer burden for healthcare. Moreover, the threat of lost healthcare coverage would provide an incentive for people to maintain their student loan payments current.
I have now idea exactly how feasible this is nor any recommendations about how to implement such a program. But if the government can mandate medical care coverage and earn $40 billion dollars per year off student loans, you’ m think they could do something about the people who have can’ t afford to enroll in an insurance exchange because their month-to-month loan payments are too high.
I do, anyway.
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