The number of young adults with health insurance increased by almost a million in the past year.
Approximately 900,000 people under age 26 became insured between January 2010 and March 2011, according to data released last week by the Centers for Disease Control and Prevention. The increase, which outpaced last year’s U.S. Department of Health and Human Services projections, lowered the rate of uninsured 18-to-25 year olds from 28 percent in the third quarter of 2010 to 24.2 percent in the second quarter of 2011.
Last week, members of the Obama administration attributed the increase to a provision in the Affordable Care Act that allows young adults to remain on their families’ insurance policies as dependents until age 26. This provision went into effect on Sept. 23, 2010.
While the suggestion that the Affordable Care Act directly caused the rise in the number of insured young adults has not been proven, Kathleen Sebelius, secretary of the Department of Health and Human Services, said the U.S. Census Bureau’s data is evidence that the legislation is working.
“The Affordable Care Act has made the health care system better for millions of Americans,” Sebelius said. “This law is helping to give hardworking families the security they deserve and stop insurance company abuses, hold down insurance premiums and strengthen Medicare.”
University professors pointed to the reduced number of uninsured Americans in all other age groups and the corresponding time of the enactment of the health care law as further support that the act has increased the number of young adults with health coverage.
Historically, young adults have been the least likely age group to invest in health insurance coverage, according to Matthew Davis, an assistant professor in the University’s Medical School and Ford School of Public Policy.
Davis said the increased number of insured young adults is “impressive.”
“This is one of the early efforts under health care reform as a proof of principle that a change at the federal level can translate across the country,” Davis said. “We can see the effect of broadening coverage, but we aren’t seeing the strain on the system of a very high number of people who suddenly have coverage.”
Young adults tend to stay on their parents’ plans since it costs less to be a dependant, Davis said. A single-person insurance policy could cost more than $5,000 per year, but a young adult dependant’s share of an existing plan costs about $1,200 per year.
The lower cost has been “a very good thing” for young adults, like recent college graduates struggling to find jobs, Davis said.
Similarly, Catherine McLaughlin, a professor in the University’s School of Public Health, said the option of remaining a dependant on their parents’ health insurance plans offers young adults respite from extraneous costs since many people in their 20s are already weighed down by tuition price tags.
“Young adults, even if they want health insurance and they’re willing to pay a premium for health insurance, can’t find an affordable package, and they can’t get it through their employer as part of a group,” McLaughlin said. “And this offers them a way to stay as a dependant on their parents until 26, when they are more likely to be finished with schooling, ready to get a job in a place that offers health insurance and get started on their adult career.”
Despite the increase in insured young adults, Dean Smith, senior associate dean of the School of Public Health, said he isn’t completely convinced this will reduce health care costs. Young adults — who McLaughlin and other health care experts have termed “young invincibles” — do not tend to incur excessive health care bills, Smith said.
“For most persons in this age range, their assumption that they’re young and healthy and not very likely to have catastrophic health care costs is, in fact, true,” Smith said. “So I don’t think that there’s going to be a big health effect from this population now having better insurance coverage.”
Smith added that given the provisions of health insurance coverage statewide, the effects were likely to be even less pronounced in Michigan. Unlike many policies in other states that often terminate coverage for young adults at ages 18, 21 or 22, several insurance plans in Michigan — even before the Affordable Care Act was implemented — allowed young adults to remain dependants until age 25.
Smith added that the provision wouldn’t likely have a large impact for University students. Several years ago, Smith and other University professors conducted a study to examine whether health insurance should be mandatory for University students. They found that the number of students without insurance was relatively low, as was their economic burden — like costs for emergency room visits — for the University of Michigan Health System.
Five percent of undergraduates and 10 percent of graduate students at the University did not have health insurance as of January 2011, Robert Winfield, the University’s chief health officer and director of the University Health Service, told The Michigan Daily at the time.
Still, Davis said at the option for young adults to stay on or join their families’ plans would be helpful for people continuing to feel the effects of the recession.
“I think what we’re seeing here is a lot of late teens and twenty-somethings are taking advantage of this option because it makes such good sense,” Davis said.