While full implementation of Obamacare relies largely on states, the federal health law’s ultimate goal of achieving universal health coverage at an affordable price depends on young, healthy individuals to sign up for coverage.

Because health insurance plans are forced to include more benefits and services, premiums inevitably rise.  To help offset the higher cost of health coverage, premium assistance subsidies are offered to individuals and families with a household income between 100-400% of the federal poverty level.

Even with the aid of these subsidies, health care coverage will still prove to be expensive for healthy, young individuals – otherwise known as “rate shock.”  The young, healthy population will have to pay higher premiums to cover the costly premiums of the older, sicker population.  This guarantees the older population will not be burdened with skyrocketing premiums coming out of their own pockets.

What is a healthy, young person to do?  One option is to drop his or her coverage.  A penalty (tax) will come with dropping coverage, since that person fails to comply by the individual mandate.  However, the penalty is a fraction of the cost of the premium that individual will have to pay via a heavily regulated health plan.  A recent article by John Davidson in the National Review Online reports:

According to the Kaiser Family Foundation’s subsidy calculator, a 27-year-old making $23,302 a year (200 percent of the federal poverty level) will face an estimated premium of $3,163 in 2016. The federal subsidy on the exchange would cover $1,695, leaving an out-of-pocket difference of $1,468. If our 27-year-old is healthy and has other uses for that money, he’ll most likely opt to pay the fine, about $582, which will automatically be deducted from his federal income-tax refund.

The unintended consequence of the young “invincibles” who would rather pay a lesser penalty instead of largely subsidizing costly patients will thereby generate skyrocketing premiums for the older population.  A death spiral is in the works, and repeal is in need.