The provision in the Patient Protection and Affordable Care Act (PPACA) that requires health insurance companies to let children stay on their parents’ policy up to age 26, has recently figured prominently in the news. Most Democrats enthusiastically support it, and a few Republicans do as well, arguing that it has already helped 2.5 million young adults gain health insurance, and will “help” many more in the future. Though it’s politically popular to provide a “safety net” for America’s young adults, there are many characteristics of the under-26 mandate that make it an unsustainable and unwise policy.
Among the major shortcomings of the under-26 mandate:
- It will increase health care premiums for everyone, not just those who keep adult children on their policy. (Kaiser document)
- It has already increased costs for the average family between $150 and $450 (New York Times, considering an average premium of $15,073)
- It has already resulted in some employers dropping all types of dependent coverage, to avoid these additional costs. (Wall Street Journal article)
Although the mandate is supposed to support young adults in an important transitional period of their lives, it will actually create more difficulties for them. For example, it will:
- Make it harder for young adults to get employer-provided insurance as employers face financial incentives to drop coverage. (House Ways and Means Committee report)
- Cause colleges to shut down their low-cost student insurance programs, or raise premiums significantly. (Wall Street Journal article)
- Increase insurance costs for young adults who must buy their own insurance by 19-30%. (Forbes article)
And, despite what many believe, this mandate isn’t the only way young adults can be guaranteed coverage.
- Even since the mandate took effect on September 23, 2010, some young adults have obtained health insurance through a new job, rather than as a result of being added to their parents’ plan. (Bureau of Labor Statistics employment reports for September 2010 and June 2011, the period measured by HHS.)
- Even without the federal health law, as of June 2010, 37 states had extended dependent coverage provisions in health insurance. So even if the federal law were to be struck down by the Supreme Court or repealed by Congress, many newly insured young adults would still be able to remain on their parents’ plan. (To learn about your state’s policy, click here for a table from the National Conference of State Legislators.)
- Even without any government mandates (state or federal), many insurance companies offered plans with some types of dependent coverage for young adults. (Evidenced by this 2008 study from the GAO showing that a strong majority of college students were already insured on their parents’ plans.)
- UnitedHealth Group, the nation’s largest publicly traded health insurer, recently announced that it would continue to include under-26 coverage in its family plans, even if the mandate is struck down or repealed. Other insurers are likely to follow suit.
As these facts confirm, freedom generally always works better than government. The private sector can and will provide affordable health insurance coverage options for everyone, including young adults, if allowed to do so.