Why Is Obamacare Raising Premiums on Young Adults?

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Many Americans are worried about the cost of Obamacare, and the opening of the health-care exchanges has millions of would-be insurance buyers seeing rates they'll pay for the first time. Several studies have shown that young adults in particular are likely to pay more under the Affordable Care Act. But why is this the case, and what impact will it have on Obamacare's success?

In the following video with Dan Caplinger, the Fool's director of investment planning and author of the special free report "Everything You Need to Know About Obamacare," Motley Fool health-care bureau chief Max Macaluso asks Dan about the controversial topic of why many young adults will pay more. Dan cites one study that points to increases for young adults in all 50 states, with very large increases in some areas of the country. Among the reasons are the fact that many young adults prefer lower-cost policies that don't provide as comprehensive coverage as Obamacare requires, essentially forcing them to upgrade to coverage that many of them don't believe they need. Moreover, technical aspects of the Affordable Care Act also promote more even distribution of insurance premium costs across the age spectrum, potentially putting some of the overall health-care burden on young adults that they otherwise wouldn't have to bear.

Max and Dan conclude with a discussion of the potential investing fallout from higher premiums on young adults. With President Obama and former President Clinton both pointing to the need for young adults to participate in the health-insurance exchanges for Obamacare to reach its full potential, a failure to attract enough young adults could cause problems for the program and for WellPoint , which has been most aggressive in establishing exchange-based coverage options. Yet even UnitedHealth and Humana , which haven't participated as much as WellPoint, could see fallout if young adults give up on seeking health insurance entirely.

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The article Why Is Obamacare Raising Premiums on Young Adults? originally appeared on Fool.com.

Neither Fool contributor Dan Caplinger nor Max Macaluso, Ph.D., has any position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group and WellPoint and owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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