ACA young adult coverage expansion represents “a rare public policy success,” report finds
The Patient Protection and Affordable Care Act (ACA) provision allowing parents to cover their young adult children under their employer-sponsored health insurance plans resulted in a 3.5 percentage point decline in the number of uninsured young adults who were eligible for the expansion. This was among the conclusions of study reviewed in The Role of Federal and State Dependent Coverage Eligibility Policies on the Health Insurance Status of Young Adults, Working Paper 18254, from the National Bureau of Economic Research (NBER).
The ACA requires a group health plan and a health insurance issuer offering group or individual health insurance that provides dependent coverage for children to continue to make health coverage available for an adult child until the child turns 26 years old. Unlike the young adult coverage expansion laws in most of the 31 states that have enacted such laws, this ACA provision applies regardless of whether or not the dependent is a full-time student, disabled, or married. Furthermore, the ACA provision prohibits a higher premium for the young adult dependent, while nine states either required or allowed higher premiums for enrolled young adults. In 2009, prior to the ACA enactment in 2010, 31.4 percent of young adults were uninsured.
According to the NBER report, “without interactions between state and federal reforms we attribute to the ACA dependent coverage rules a more than 25 percent rise in the share of targeted young adults with non-spousal dependent coverage (a 5.3 percentage point increase) and a nearly 10 percent drop in their uninsured rate (a 3.5 percentage point decline) between 2009 and 2010. This decline in the uninsured translates to about 716,000 young adults gaining coverage as a result of the ACA in 2010.” (Emphasis in original) Furthermore, the report noted that “the decline in the share of the population uninsured indicates that many of those gaining dependent coverage did not switch from other sources.”
The report noted that the increased coverage rate was greater among young adults ages 19 through 25 targeted both by state laws that aimed to expand young adult access and the ACA. NBER surmised that the state laws that preceded the ACA may have raised awareness of the potential coverage source. The report concluded that “If the ‘priming’ hypothesis is correct, take-up among ACA-targeted young adults who were not eligible under prior state laws will likely grow substantially over time.”
The NBER report concluded that as a result of the ACA young adult coverage expansion “family premiums will increase as more young adults are enrolled. Further, in 2014 when the ACA individual coverage mandate takes effect and the limited anticrowdout provisions in the ACA will end, the availability of dependent coverage may attract comparatively healthy young adults, leaving non-group plans with higher average risk and premiums. Such a shift also may increase the cost of health insurance tax credits available through health benefit exchanges. In addition, businesses that employ primarily young adults may become less likely to offer coverage as fewer young workers seek their own health benefits. Still, the ACA young adult dependent coverage expansion represents a rare public policy success in the effort to cover the uninsured.”
For more information, visit http://www.nber.org/papers/w18254.