As graduates leave college campuses and join the workforce, they face a serious question - to buy health insurance or not? In 2014, President Barack Obama's healthcare reforms will take full effect, forcing all Americans to find a way to pay for healthcare coverage or face a fine.
Young adults will have several options to purchase insurance, but few are truly affordable. Both supporters and opponents of the mandate say many young adults may opt to pay the fine because it will be cheaper than purchasing health insurance. And if young adults opt out of the system, insurance costs will only continue to rise, both sides say.
"Unless you force young, healthy people to purchase health insurance, the cost of coverage will soar as the sick buy insurance and the healthy wait to buy until they really need it," Joseph Antos, blogger for the American Enterprise Institute, said on AEI's website, "The result, as we have seen in New Jersey and other states that tried this before, is a collapse of the insurance market."
Even though they fear young adults won't buy insurance, supporters of the mandate say that it's silly for the 'fit and frugal' to forgo coverage when the new regulations offer several different options. Young adults can stay on their parents' plan or pay minimum premiums, depending on their income.
But opponents of the mandate say the requirement itself encourages young adults not to participate.
"The mandate is a patch, included in the [law] to try to make the individual insurance market function under ill-considered rules that will drive up premiums and drive uninsured people away from coverage," Antos said.
The first year's minimum penalty for an individual making $16,000 a year is $95. Someone earning $35,000 per year would owe $255. In 2016, the minimum penalty rises to $695, capped at a little less than 2.5 percent of taxable income. That's about a $1,600 fine for someone making $75,000 per year.
As young adults realize the fines will only increase and the cost of unexpected medical bills will add to their financial exposure, the law's supporters expect more will choose to purchase insurance.
"It doesn't have to be cancer or a heart attack or even a bad car accident," said Karen Pollitz, a health policy expert at the Kaiser Family Foundation, "Once you show up in the ER, it starts to cost you some money."
Both opponents and proponents worry about the strain uninsured adults will place on health insurance companies. Kathryn Nix, reporter for the Heritage Foundation, said that if healthy adults forgo buying premiums, healthcare expenses will go up for the sick and elderly patients who depend on insurance to decrease the cost of their frequent hospital bills.
"Removing young and healthy patients from risk pools will in turn result in further premium increases, as only sick and elderly patients will be left, creating a 'death spiral' as cause and effect intertwine to result in evermore increasing premiums, causing more Americans to drop coverage," Nix said.
The options the government plans to provide to the young adults to make insurance more affordable may exacerbate the problem, opponents say. Some employers, especially smaller businesses paying lower wages, may now drop their plans and expect their workers to get government help. Young adults already face the highest unemployment rate nationwide, which will make it hard for many to afford any coverage at all. And the option for staying on their parents' plan until they're in their late twenties only shifts the burden to older Americans for a short period of time, opponents say.
"As far as the penalty goes, since Obamacare pushes the cost of insurance up, firms will face growing pressures to dump coverage, especially since workers will be able to get covered using taxpayer subsidies in the government exchanges if they do so," Nix said, "There are better ways to expand coverage in this age bracket that would encourage young adults to become covered on their own."
The Associated Press contributed to this report.