Young Adults are Early Winners Under Health Reform

Health reform already has one clear group of winners. Two and half million young adults have been able to go back on their parents' insurance policies. That's the conclusion of a new report from the National Center for Health Statistics. Without health reform, most of them would probably be uninsured.

Before health reform, most insurance plans dropped children when they reached age 19, or if they were students, age 23. Among its numerous consumer protection provisions, the reform law requires insurance companies to continue coverage for dependents up to age 26. That rule took effect last September.

Nearly 30 million Americans are between the ages of 19 and 25. Before the change, they were more likely to lack health insurance than those in any other age group. Ten and a half million of them were uninsured. The number has dropped to 8 million today.

That means the percent of this group without insurance has fallen from 34% to 29%.

Young adults tend to be uninsured for two main reasons. Some see health insurance as unnecessary because they consider themselves invincible and unlikely to need it.  They'd rather save the money that would have gone to premiums.

However, a large portion of them want coverage but can't find it. Some can't get jobs out of college, while others work part-time and don't qualify for benefits. The bad economy makes their prospects even worse.

Those who can't get health insurance through a job can apply for an individual policy directly with an insurance company. However, this coverage can be expensive, and many applicants are turned down because of preexisting conditions. In many cases, coverage is denied for even minor ailments.

This will change when health reform takes full effect in 2014, assuming the Supreme Court allows that to occur. At that time, everyone who applies must be offered individual coverage regardless of their medical condition, and rates will be subject to tighter oversight. But that's a long time to wait if you can't find coverage today.

The addition of young adults to their patents' coverage has very little downside. Its effect on costs has been negligible, with estimates in the range of an added 1 - 2%. In the long-run, it could actually reduce costs for some employer groups by adding younger and healthier people to their risk pools. It could create more administrative work for human resources departments, but that is a relatively minor burden.

A few questions about the longer-term effects of the provision remain. Will some employers change the way they charge their workers for coverage by increasing the premiums for each child who is added? That could discourage some young adults from taking advantage of the opportunity for coverage. There is also the question of what happens when young adults reach age 26. Will employers automatically drop them, or will some permit them to remain on their parents' policies for a few more years?

However these questions are resolved, it is clear that this part of health reform has had a significant positive effect. None of the legal challenges to health reform concern this or any other of the consumer protection provisions. However, the Supreme Court could decide to throw them all out if it finds other parts of the law to be unconstitutional. If it does not, health reform opponents in Congress could still try to follow through on their threat to repeal the law entirely.

If either of those were to occur, over 2.5 million of the law's winners would find the rug pulled out from under them. Why would anyone want to let that happen?

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