The $1000 mistake? Why getting insured is 5x more costly for healthy young adults in 2014

The $1000 mistake: why getting insured is 5x more costly for healthy young adults in 2014

A NerdWallet study predicts that health care expenses for healthy young people who are uninsured in 2014 will be five time less expensive than those enrolled under the Affordable Care Act – suggesting that the Obama Administration has its work cut out to fulfill its goal of getting the nation’s younger, healthier population enrolled and keeping insurance costs low.

Data released Monday by the U.S. Department of Health and Human Services shows that 55 percent of Americans who enrolled in Obamacare in the first three months were ages 45 to 64 – with people aged 55 and older accounting for one-third of all those signed up. Only 24 percent of the 2.2 million who have signed up are between the ages of 18 and 34.

NerdWallet predicts that many healthy young adults will remain uninsured in 2014 – and this decision could make those in the “healthy majority” over $1000 richer. Our analysis suggests:

  • A young, healthy, insured individual will incur $1,717 in out of pocket health care costs in 2014 – with the majority of these expenses relating to premium costs, not to direct health care expenses.

  • The average uninsured young adult will pay $348, including the cost of physician office visits and the penalty for not carrying health insurance.

  • An insured patient who visits the emergency room (ER) once during the year will pay approximately $2,791 in annual healthcare costs, accounting for premiums, negotiated ER costs, and doctors’ visits.

  • Those uninsured young adults who visit an ER in 2014 will pay $2,022 in annual out of pocket healthcare costs, including full freight or “chargemaster” pricing for the one-time visit to the ER and after paying the $95 penalty.

The healthy majority of young adults will have only modest health care expenses in 2014 – the majority of young adults will visit a doctor, and about one-quarter may have an injury or accident that requires an ER visit. A small minority of young adults will suffer anything more serious, such as a chronic condition or the need for overnight hospital care. NerdWallet Health analyzed health costs to reveal that it isn’t just a “young and reckless” mentality keeping so-called “young invincibles” from signing up—many young adults will follow a logical financial rationale for remaining uninsured in 2014.

Most of the “healthy majority” will fall into one of four categories

The intent of this study is to help young, uninsured Americans evaluate the cost and benefit of purchasing health insurance. To do this, NerdWallet Health analyzed four likely health scenarios that might affect the average healthy young adult:

1. Remain uninsured, healthy

-Pay the tax penalty for being uninsured, and visit the doctor sparingly

2. Purchase insurance, healthy

-Pay monthly insurance premium, visit doctor as required

3. Remain uninsured, visit ER once

-Pay the tax penalty, visit doctor sparingly, and pay the full cost of an ER visit

4. Purchase insurance, visit ER once

-Pay monthly insurance premium, visit doctor as required, and pay the negotiated rate of an ER visit before reaching plan deductible

Key findings:

  • Many young adults fall into a category we call the “healthy majority”, requiring little (if any) medical care in a given year. Only 23.5 percent of young adults visit an ER in a one-year period; even fewer (7 percent) stay overnight at the hospital. Approximately 30 percent of young adults do not see a doctor at all during the year
  • This healthy majority of uninsured young adults will spend approximately $348 on health costs in 2014 versus $1,717 for those who opt for insurance but stay out of the ER. Roughly one-fifth of what a healthy insured young adult will pay and $1,369 dollars less than what an insured peer will pay.
  • Even young adults who visit the ER will pay hundreds less in health care expenses during the year if they are uninsured.
  • An uninsured individual who visits the ER once will incur little more in health expenses than an insured young adult without any ER visits during the year.
  • The penalty for not having insurance in 2014 will be just $95 for many young adults.

Discussion & expert opinion

Whether or not to purchase health insurance in 2014 is an important choice for all Americans. Health insurance expert and VP of Health at NerdWallet, Christina LaMontagne says, “We did this analysis to get a better understanding of why it is so hard for healthy young adults with modest incomes to pay for health insurance.” She continues on, saying, “When money is tight and the rent bill is due or the refrigerator is empty, spending money on insurance premiums is hard to justify – especially if one is healthy and rarely sees a doctor.”

The Affordable Care Act has made coverage available to everyone regardless of prior conditions and it has provided subsidized options to millions of people. “For many Americans, the Affordable Care Act offers new provisions making health insurance more accessible and affordable. Those are useful carrots. But if the goal is to get more people to sign up, then the penalty must be a bigger stick. At $95, the penalty in 2014 is inexpensive enough that many young adults will take this option. As penalties rise in 2015 and 2016, we expect more young adults will eventually sign up for coverage.”

Finally, LaMontagne urges more price transparency in healthcare. “Transparency in healthcare can go a long way to help all patients – insured or uninsured – better anticipate, budget for, and acquire high quality, low cost care. NerdWallet Health has built a leading calculator for patients researching hospital care options.”

Quick facts on the young and uninsured

  • Fewer than one-third of uninsured young adults say they plan to enroll in the health insurance exchanges.
  • The White House has a goal of enrolling 2.7 million young adults in marketplace plans in 2014.
  • More than 95 percent of young adults report their health as “good, very good, or excellent”.
  • The leading cause of death for young adults ages 18-34 is unintentional injury; even so, less than 15 percent of the young adult population reports an injury-related ER visit in a two-year period (struck by or against objects or persons, motor vehicle traffic, falls, cut or pierce, or overexertion).
  • Fewer than 15 percent of young adults report having one of the following chronic conditions: arthritis, asthma, cancer, diabetes, heart disease, or hypertension. Asthma is the most common, at 7.2 percent – the remaining conditions occur at a rate of less than 5 percent in young adults.
  • Mental health issues are also infrequent in the young adult population: just 8.6 percent of young adults report major depression, generalized anxiety, or panic disorder.

If you decide not to purchase insurance

1. Keep in mind that the penalty will increase in the future

This analysis is for 2014. The cost of being uninsured will go up in coming years due to increasing penalties: the minimum penalty for individuals will be $325 in 2015 and $695 in 2016.

2. Become an expert on negotiating medical bills

The charge for an ER visit presented in this study is an estimation of what you will be billed by the hospital. Many doctors and hospitals, however, will negotiate bills or help uninsured patients access less expensive government or charitable programs. In the case that you do require expensive medical care, you should be prepared to examine your bill and negotiate the charges.

3. Stay (or become) part of the healthy majority

Being healthy and staying frugal is possible. Follow these money-saving tips for fitness, stress reduction, and healthy eating.


    • Get a free gym trial to see which you like best (Gold’s and 24 Hour Fitness, among others, offer these).
    • Costco.
    • Work out outside. It’s free, and a chance to get some fresh air. Look up workouts on YouTube if you get tired of the same routine.
    • Find deals on fitness gadgets.
    • Use free or inexpensive mobile apps to track your fitness goals (Endomondo is good for running, Obstacles XRT is good for intervals and at-home training).

Eat better

    • Join a Community Shared Agriculture (CSA) to get fresh, locally grown produce at discounted rates. Many CSAs deliver, so you’ll also save time on grocery shopping.
    • Keep an eye on coupons and stock up on non-perishable staples (peanut butter, olive oil, oatmeal, etc.)
    • Check out online coupons before you shop. Whole foods and Sprouts are two good examples.
    • Follow healthy eating coupon blogs (see here and here for examples).

Reduce stress

    • Listen to music – research suggests that music can help to reduce stress. Listen for free on websites like Pandora and Spotify.
    • Driving and parking is a major source of stress for many. Reduce the stress and cost of parking with apps like ParkMe.
    • Try a cheap yoga class. Many studios offer donation-based classes, and others have discounted rates for first-timers.

About NerdWallet Health:

NerdWallet helps consumers access transparent health care pricing and affordable health insurance. For more information please visit or follow us at @nerdhealth.


Penalty: According to the Kaiser Family Foundation, the median income for an uninsured individual in the U.S. is approximately 150% of Federal Poverty Level – $17,235 in 2013. We used the Intuit Health Care Penalty Calculator to calculate the penalty for being uninsured in 2014.

Premium costs: A report from the Department of Health and Human Services estimates that 66 percent of single young adults ages 18-34 will be able to purchase silver, bronze, or catastrophic health insurance coverage for less than $100 per month in the Health Insurance Marketplace. We therefore estimated the monthly cost of insurance for young adults to be $100 per month.

ER visit: The cost of an ER visit for the uninsured individual was estimated based on an ER cost study that determined the median charge for the top ten ER diagnoses. The charges in this study reflect what was billed by the hospital, not the amount ultimately paid by the patient. The cost of an ER visit for the insured individual was estimated from the Medical Expenditures Panel Survey, which reports the median ER expense for insured individuals. All charges were scaled to predict 2014 values by using the annually increasing National Health Expenditure Projections from the Centers for Medicare and Medicaid Services.

Physician office visits: The yearly cost of physician office visits for uninsured and insured individuals was estimated from the Medical Expenditure Panel Survey. All charges were scaled to predicted 2014 values by using the National Health Expenditure Projections from the Centers for Medicare and Medicaid Services.

Couple photo courtesy of Shutterstock.

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