It started last month. Blue Cross started sending me notices that I will have to choose a new health care plan. The nudging shifted to shoving some time mid-week, with regular calls to my mobile. And now I see why. It turns out I’m one of the 3% who will have to pay more for health care under the Affordable Care Act (which I fully endorse).
Me and twenty-somethings, apparently, at least if you’re listening to the steady drumbeat of headlines proclaiming that young adults are going to suffer under ACA.
ACA is intended to cover more Americans and make insurance market more competitive in an effort to slow skyrocketing health care costs. But for us 3%, at least initially, the costs will rise, mainly because the new policies now must cover services such as maternity care and others not covered before without paying a premium premium.
Young adults are not likely in that category, but you wouldn’t know it from the fear-mongering campaign of the Right, which as is typical, starts from a grain of truth, but ignores a lot of other truths.
Indeed, at first blush it looks like many young adults will see their costs rise, depending on the state where they live. (If you’re working and your employer covers you, this is all a moot point). The right-leaning Manhattan Institute created a map with state-by-state comparisons.
MIT economist Jonathan Gruber–an architect of the Massachusetts universal plan and a highly involved consultant on ACA– told CNN that premiums will likely rise in certain circumstances:
“In some states, insurance markets were already regulated to not allow insurers to discriminate against the sick. In those states, premiums will fall, like in New York, where premiums will fall by as much as 50%, … In other states insurers were freely allowed to discriminate against the sick. In those states, by ending the discrimination, we’re going to raise premiums in states like Wisconsin, or some of the Southern states.”
Likewise, the right-leaning Cato Institute reports that overall, premiums will likely rise for the young and healthy, and fall for older people and people who are sick. The reasons, according to economist Aaron Yelowitz, are the “community rating,” and the “guaranteed issue.” The former means that older people will not pay proportionately more for health insurance than a young person, and the latter means that insurers can no longer turn down sick people with pre-existing conditions. The two combined, according to Yelowitz, means that a healthy 25-year-old will pay the same amount as a smoker who is 65.
Or as Chris Conover told Forbes: ”That means a 22-year-old waitress paying $2,068 for her health insurance will have to fork over $3,000 when Obamacare takes effect.” Quite the overstatement, but more on that below.
In addition, the individual mandate–requiring everyone to have insurance or pay a fine–is flawed, and some argue will lead to higher premiums because of adverse selection, meaning the young and healthy have the least incentive to join in. The size of the mandate’s penalty for not buying insurance is puny compared with the cost of health insurance– about 10% of a typical plan, according to Avik Roy, a former Romney campaign adviser. Not having everyone in the pool undermines the very foundation of universal care– and the reason insurance companies jumped on board in the first place. Said Roy, “Because the mandate is weakly enforced, small in size, and gradually put into place, whereas the pre-existing condition mandate takes effect immediately, Obamacare creates the recipe for an adverse selection death spiral.”
This is not a minor point. The individual mandate could conceivably affect a sizable share of young adults given that this group is the most likely to be currently uninsured. The Census Bureau in 2012 estimated that 23% of 18-24-year-olds and 27.3% of 25-34-year-olds were uninsured in the prior year.
All this spells trouble for young adults and health care. Or so it seems.
But the critics overlook some important caveats.
The first is that young adults can stay on their parents plan until age 26 under ACA. This has been a wildly popular feature since it was introduced pre-ACA.
The second is that in states that are expanding Medicaid, young adults who are living on limited incomes will now be covered. The expansions will raise the income thresholds for eligibility to 138% of the federal poverty line and cover single individuals, not just parents. That includes quite a few young people. In 2012, according to the U.S. Census, roughly 28% of young people aged 18-24, and 23% aged 25-34 had incomes that fell into that range.
The third caveat is that many other young adults will be eligible for subsidies that will lower their premiums. According to the left-leaning Urban Institute, only 11% of young adults under 27 who are currently buying individual insurance (non-group) will face full costs of health care, and only 14% of the currently uninsured will.
That waitress that Chris Conover uses as an example likely falls into one of the above scenarios. If she pulls in $20,000 a year waiting tables, she is probably now opting for no insurance, taking the gamble that she’s young and healthy enough to risk it. Under ACA, she will be required to be insured or face a penalty, but she will also be eligible for a subsidy, given her income. The subsidy will bring her premiums down to $85 a month, or a little over $1,000 a year, not the $3,000 a year Conover claims. The Kaiser Family Foundation has a helpful calculator to calculate subsidies and premiums. The above rate is based on a 23-year-old nonsmoker without children applying for health insurance for herself only.
There are other benefits to young adults as well. The plans must cover, for example, mental health services and substance abuse disorders. Symptoms for nearly three-quarters of the lifetime diagnosable disorders occur before age 24. As the recent tragedies at the LA airport and too many others of late remind us, mental health coverage is a growing concern.
In addition, preventive health services are also a key reform. Insurers can no longer demand a co-pay or impose any cost-sharing for preventive services. Several of these services apply directly to young adults, including contraception, domestic abuse screening, alcohol misuse screening and counseling, smoking cessation programs, and HIV and STD screenings.
The debate over ACA will rage on no doubt. But for most young adults, it seems that ACA will be a true benefit.