Share

Topics: Obamacare

Philip Klein: The irony behind Obamacare's hipster tax

By |
Opinion,Philip Klein,Columnists,Politics Digest,Taxes,Obamacare

Earlier this month, Public Policy Polling released a survey on Americans' attitudes toward hipsters -- the subculture of young, urban-creative types who characteristically don jeans, faded T-shirts and thick black-rimmed glasses, worship iPhones, and sip artisan coffee.

According to the tongue-in-cheek PPP poll, "27% of voters said they thought hipsters should be subjected to a special tax for being so annoying." But the reality is that Congress already passed a hipster tax. It's called Obamacare.

President Obama's health care law forces insurers to offer comprehensive health insurance benefits to those with pre-existing medical conditions and limits how much insurers can vary prices based on age or health status.

In order for insurers to be able to take on these less-healthy beneficiaries at a price approved by the federal government, they have to lure more profitable younger and healthier individuals into the insurance pool.

Thus, the controversial individual mandate forces all Americans to purchase a government-approved insurance policy or face a penalty, which the Obama administration successfully argued before the U.S. Supreme Court was a tax.

That means much of the burden of the law will be on the hipster generation of Americans in their 20s and 30s, who will have to choose between paying a tax or paying for insurance they may not want.

Defenders of Obamacare argue that, starting next year, the law will provide subsidies to help individuals purchase insurance on new government-run online shops, called exchanges.

But the problem is that those subsidies are less generous for younger Americans. For instance, a 31-year-old individual earning $40,000 wouldn't qualify for any federal subsidies, according to the Kaiser Family Foundation's subsidy calculator.

But a 59-year-old individual with the same income could receive more than $4,000 worth of assistance. When all is said and done, the younger individual would have to shell out $2,900 a year for premiums, which would be more than the older individual, even though the younger individual is less costly to insure.

Last week, advocates of the health care law were touting new insurance rate estimates for the California exchanges as a major success story for Obamacare. But they aren't very good news for the hipster crowd.

Under current law, a 25-year-old hipster living in San Francisco's Mission District could purchase plans for as cheap as $95 per month through the website eHealthInsurance.com.

But according to Covered California, the entity that runs the California exchanges, in 2014, the cheapest qualifying plan in the state will be $162 per month -- or nearly 60 percent higher.

Younger individuals would stop being eligible for subsidies after earning $32,000 per year. At 26, they would no longer have the option of remaining on their parents' insurance policies, and at 30, they could no longer legally purchase cheaper, catastrophic health insurance.

It's also important to keep in mind that hipsters tend to live in large cities with higher costs of living, but federal subsidies aren't fully adjusted to account for that.

Through the end of this year, individuals with low medical costs still have the option of going without insurance, in which case their premiums are $0. In 2014, even in the highly-touted California system, young workers will be given the option of spending at least $2,000 per year on insurance or paying a penalty of up to a few hundred dollars per year if they refuse.

American hipsters from San Francisco to Brooklyn voted for Obama in overwhelming numbers in two elections. Next year, his signature piece of legislation will begin penalizing them. How ironic.

Philip Klein (pklein@washingtonexaminer.com) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @philipaklein.

View article comments Leave a comment
Author:

Philip Klein

Commentary Editor
The Washington Examiner