Myth #4: We have so many young people without insurance because they think they’re immortal and don’t need it.

We often hear about people in their twenties and thirties who don’t buy health insurance, even when it’s offered by their employers. The most common explanation is that they are young and foolish and don’t understand the need for health insurance. They seem to think they’re immortal and don’t need it.

I believe most of them are actually behaving rationally in their response to a system that is seriously biased against them in favor of older workers. The problem is not one of employee ignorance, but employer discrimination.

We know that about a fourth of all uninsured individuals have access to employer-sponsored and subsidized insurance, but they decline to take it. We also know that the increase in the uninsured over the past two decades has been almost entirely from those who refuse to participate in employer-sponsored insurance, rather than from reduced offerings of insurance. A large share of these voluntarily uninsured are younger employees.

Most employers that offer health insurance require each participating worker to pay part of the premium through payroll deductions. Often it’s a big contribution. For example, an employer might contribute only a portion of the employee-only premium, while requiring the worker to pay the remainder plus the entire premium amount for his spouse and children.

Younger employees tend to use considerably fewer health services than older ones. They also make less money—often a lot less—because of their relative inexperience and lack of seniority. Here’s the rub. Virtually all employers require the same premium contribution from younger workers as older ones. Thus, a 25-year-old municipal worker with a wife and two young children is required to pay the same premium as his 60-year-old colleague who has a wife and two children in their teens and early twenties. This is despite the fact that the insurance company actually charges the employer far less for the younger worker’s coverage because of its use of age-rated premiums.

Thus, younger employees are required to pay more than their share to subsidize older workers, and many of them just don’t see that as a good value. As a result, many are declining coverage as simply a bad deal they can’t afford.

As the pig-in-a-python baby boomer generation approaches retirement, average workforce aging, combined with such community rated employee health premium contributions is making health insurance increasingly unaffordable for the young, which accounts for a large portion of the increases in the uninsured.

Young workers aren’t being naive; they’re being screwed. If employers charged age-rated premiums the same way their health insurance companies do, it could go a long way toward making health insurance affordable for younger workers. At the same time, older workers would have to pay more, but at least they are more likely to be able to afford it.