Young Adults and Health Insurance

(cross posted at freeforall)

Sarah Kliff highlights a study from Commonwealth that finds 2 in 5 young adults (age 18-29) reported a cost-related barrier to receiving health care in the past year. Her main point is that the so-called “young invincibles” are apparently not as invincible as they think.

Tangentially related is United Health Care’s announcement today that they will continue to allow young adults up to age 26 to be covered by their parent’s health insurance regardless of the outcome of the Supreme Court case on the constitutionality of the ACA. In one sense, this is good news from a coverage expansion perspective; it simply maintains another route to coverage in our Rube Goldberg system of providing health insurance that is insulated from what the SCOTUS may rule. There would be fewer covered today without this provision, and for that, I am glad. However, this aspect of the ACA (the ability of a person up to age 26 to get health insurance from their parent’s job, even if they are not in school or are married) strikes me as one of the clearest examples of how much work is left to be done even if the ACA is implemented exactly as passed.

That provision has always stuck in my craw as simply not making sense, not on technical grounds, but on what it says about our nation’s inability to put together a system that makes sense. For some reason, I associate it with my nephew who served in the Marine Corps, and who did two tours in Afghanistan by the time he was 22. If you are old enough to go to war, it seems that you are old enough to obtain health insurance some way other than your parent’s job.

We need to develop a straightforward means of providing health insurance coverage to all young adults, that makes sense in light of the transitional nature of that age, and the epidemiology of health care needs and use at this age. There is much to be done regardless of the SCOTUS ruling.

Comments

  1. bemused says

    It doesn’t stick in my craw. It was the only way my daughter, under-employed with a new college degree from an Ivy institution, was able to get coverage for the year or so that the ACA provision was in effect and she had a crap, exploitative job with long hours and no benefits. Thank God I had a job with benefits and that she finally got a job that paid a somewhat living wage and has benefits. Not sure what the point of your post is.

    • Don Taylor says

      @Gary K has it correct….I want your daughter and everyone to be covered in a manner that doesn’t depend upon a parent’s job. I understand why this provision was included in the ACA as we were trying to cobble as much coverage as possible, but it just points out there is much to be done beyond the ACA provisions. It is interesting that this cobble is emerging as the most bipartisan notion from the ACA.

  2. Gary K says

    @bemused: The point of the post is not that your daughter should not have been covered. But under a rational system she would be covered as herself, an adult person, regardless of whether her job was crappy or gold-plated, and with mom or dad’s job being completely irrelevant. The ACA is a crazy jury-rigged contraption. It’s also what was achievable, it does a lot of good (as you point out), and it will be an outrage if SCOTUS guts it.

  3. Ken Doran says

    You do realize, don’t you, that no one whatsoever thinks that ACA is an objectively really good system? The spectrum roughly breaks into: A. Vested interests for whom the wasteful aspects of the system are feature not a bug; B. Those who passionately oppose anything Barack Obama is for; and C. Those who want a better system every bit as much as you do but (so far) can’t get it past A and B. In this context, “our nation’s inability to put together a system” rings just a bit hollow.

    • Don Taylor says

      The inability to put together a system is an old, not a new problem. Especially once we passed EMTALA in 1980s we have been in policy ‘no mans land’ where we have provisions that guarantee at least emergency care but haven’t been able to take the notion to full completion and develop a universal coverage approach. The ACA was what could get 218 votes in House, 60 in Senate and 1 in the White House.

  4. says

    I’ve been dealing with this issue all morning. My roommate is 26, recently unemployed, and he has been denied coverage by everyone he’s called because of a preexisting skin condition. All I can tell him is “Hang in there until you get a job or until Jan. 1, 2014 if the law survives.” Not exactly comforting. Hopefully something will come out of looking into the “Pre-Existing Condition Insurance Plan,” tho it doesn’t look promising.

  5. Gordon Danning says

    Why does it matter whether a 25-year-old gets coverage independently, or through his/her parents’ policy? No one minds that a husband gets covered through his wife’s policy. And, in fact, it is probably more efficient to do it through the parents’ policy: most kids are covered until they are 18 anyhow, so coverage until he or she is 26 requires no additional paperwork, but merely a continuation of the status quo. Finally, of course, 25 year olds CAN get policies on their own — by purchasing them independently, or by obtaining a job with benefits. Even before ACA,parents were free to foot the bill for their adult kids’ health insurance, so I assume that ACA simply made doing so easier, and cheaper. That’s a good thing, isn’t it?

    • J says

      Why does it matter whether a 25-year-old gets coverage independently, or through his/her parents’ policy? No one minds that a husband gets covered through his wife’s policy.

      Well, it depends what you mean by “minds”. People (in the US) may be used to the idea that spouses often can only get coverage because the other spouse’s employer offers family coverage, and if this ACA provision persists then sooner or later we may be used to the idea that some 25-year-olds receive health insurance because one of their parents happens to be employed by the right company.

      Do I think that’s a good way of organizing health care provision? No!

      We could pass a law that says “if your parent’s middle name begins with A, E, N, Q, or X, you’re automatically entitled to access to health care.” When you’re talking about theoretically independent adults, that’s neither more nor less arbitrary than inquiring about the employment status of their parents.

      So, yes. In principle I object to the whole thing. It’s a dumb way of providing health care. That doesn’t mean I want to take coverage away from 25-year-olds who will get coverage from their parents’ employers under ACA; it means I want to extend coverage to everyone.

  6. doretta says

    *I* mind that some husbands have to get coverage via their wives insurance.

    What part of the fact that not all husbands who have been unable to get health insurance on their own have wives who can provide it for them do people not understand?

    Ditto all the other kludgey ways we get health insurance in this country–like having parents who can provide it if we are young enough. Yes, a significant chunk of us have been able to make the current system work OK. Millions of us haven’t.

    That’s the problem and the point of this post.

  7. Brett Bellmore says

    “We could pass a law that says “if your parent’s middle name begins with A, E, N, Q, or X, you’re automatically entitled to access to health care.” When you’re talking about theoretically independent adults, that’s neither more nor less arbitrary than inquiring about the employment status of their parents.”

    I find it interesting that you regard “somebody pays for the coverage” as roughly as arbitrary as the first letter of a person’s name. That’s …. revealing.

    Obviously there is a problem here: Insurance coverage is tied to employment, and thus somewhat at the whim of employers. Buy WHY is it tied to employment?

    Because insurance paid for by an employer is pre-tax, and insurance paid for by individuals is post tax, and thus considerably more expensive. Another way of putting it is, because the government makes insurance more expensive if you don’t get it through your employer.

    Why not just let insurance paid for by ANYBODY be pre-tax? You, your parents, your credit union, your biking club, you name it?

    • Ken Rhodes says

      That is absolutely, positively, totally sensible.

      There is also one other very important expense factor–individually obtained insurance is generally much more expensive than the same coverage in a group plan. That cost disparity also needs to be addressed.

      The problem with individually obtained coverage is “self-selection.” So the actuarial department knows darned well that the individuals who seek coverage tend to be, on average, more expensive clients, and therefore the companies charge more to insure them. An alternative would be if everyone had insurance, then the self-selection aspect would be mostly negated, and there wouldn’t be an actuarial reason for charging some folks extra.

      Hmmm … sounds like some idea Mitt Romney got implemented a few years ago.

      • Brett Bellmore says

        Again, why should the group have to be your employer? Why not any old group? Once you cut the pre-tax status of insurance loose from employers, there’s no reason you can’t get it through your credit union, block club, any arbitrary group large enough to negotiate with an insurer. Insurers would actually appreciate selling insurance to groups where membership might be life-long, rather than at the whim of HR.

        The problem with the group being government is that you make the customer an entity with coercive powers and monopolistic status. Markets don’t work any better with one customer than they do with one supplier. The temptation to abuse monopolistic power is essentially irresistible at either end of the transaction, and particularly troublesome when the monopolist has the power to pass laws.

        Frankly, were it not for the tax status, my employer would far rather just include the cost of insurance in my paycheck, (Far simpler!) and I’d far rather have a health plan negotiated by the NRA. In which I have a life membership, I’m not about to be ‘fired’.

        Might bring back fraternal societies.

        • Jake says

          The US government is dominant purchaser of bombers, spy satellites, and other fancy military gear. I haven’t noticed them using coercive power and monopsonistic tendencies against defense contractors. Instead you have Pentagon representatives talking with pride about how profitable their suppliers are.

          Before you get too excited about buying health insurance negotiated through the NRA you might want to take a closer look at the insurance offers they are sending you now. The offers the NRA is sending me are generally poorly disguised scams. Which makes sense given how I suspect the payment for those deals is structured.

        • Ravi says

          Brett,

          why do you think a voluntarily chosen group (and voluntarily chosen insurance on top of that) would be immune to adverse selection problems?

          There’s a difference between: “This is your one tax-advantaged offer, take it or leave it (and if you leave it you don’t get back a large chunk of the money that would have been paid for your insurance)”

          and

          “You can get health insurance wherever you want (individually or as part of a group you select) and you’ll still get a tax deduction or you can choose not to and keep all the money that you would have paid for insurance (modulo your tax deduction)”.

          I’ll completely agree that the second is preferable on all sorts of grounds (flexibility, personal choice, autonomy and so on), but it still an adverse selection disaster for all of the standard reasons. That someone can choose to buy ACLU or NRA or whatever-negotiated insurance (instead of buying insurance individually) doesn’t change that.

          • Brett Bellmore says

            I don’t think adverse selection is really avoidable in a free society. It can be discouraged, however, if you don’t do something foolish, like, say, ordering insurance companies to pay for preexisting conditions, or ignore good underwriting.

            Essentially the problem with the ACA, constitutional issues aside, is that it sets up a situation which naturally increases adverse selection, and then takes away everybody’s liberty to deal with it. Typical “Set up bad incentives and then order people to not act on them.” scenario.

        • says

          Big reason for using the employer as the group purchasing agent is that is basically functions as a first screen on healthiness. Few companies will have an over-concentration of extraordinarily sick individuals working for them and requiring coverage. Employed people over the gae of 29, on aggregate, are a bit healthier than people who are not in the labor force as people not in the labor force are more likely to be retired (old), on disability (massive pre-exisiting condition) or marginally healthy enough to get a job but their marginal health either deters them from taking a job or being hired.

        • Byomtov says

          The kinds of plans you are talking about have large adverse selection problems. They exist but are, I think, much less common than they used to be, for that reason.

          One reason employer-based plans work is that you can’t walk in off the street and sign up. You have to be hired. Also, based on my experience with a company of about 100 employees, smaller companies’ rates are adjusted based on claims history.

      • SamChevre says

        individually obtained insurance is generally much more expensive than the same coverage in a group plan.

        I don’t think this is true.

        Individually obtained insurance varies much more in price than the same coverage in a group plan, but for people who underwrite well, it’s much cheaper. (I bought individual insurance for me, my wife, and 3 children in 2010, after being laid off from my job; COBRA cost about $1000 a month, individual cost $250–and when my son was in the hospital for 5 weeks 3 months later, they covered that bill with no problem.)

        • Beetle says

          SamChevre, you pay just $250 a month to insure five people? That’s amazing. Who is your policy with? thanks.

          • SamChevre says

            Anthem; VA, $7500 deductible. (This was in 2010–I was hired at a job with health insurance in Sept of 2010.)

        • says

          “for people who underwrite well, it’s much cheaper” — there’s the kicker. For people who the insurance company believes won’t actually need health care, it’s pretty cheap. For everyone else, not so much. Opposing anecdatum: My son was in NICU for six weeks after he was born; the premiums we’ve paid since then have (back of the envelope) covered what the insurance company paid for the hospitalization. But they’re not going down, they’re going up.

  8. Mitch Guthman says

    I don’t think there is a problem with “developing” ways of providing good quality health to everyone at a reasonable price. The health care insurance business is an historical accident that is destroying much of the economic fabric of our country. We simply cannot afford these parasites. None of these notions of yours which you keep cheerfully describing here have any realistic prospect of being adopted so long the industry is allowed to exist in its current form and continues to be allowed to exert to malign influence. I respectfully suggest that you focus your efforts on that goal and spend less time on pointless discussions of policies which the Republicans have already rejected, time and time again.