Adult Children May Be Overlooked In ACA Repeal

The ACA healthcare repeal may not eliminate the coverage provided to adult children that was so popular when the ACA was first implemented. Adult children can currently remain on their parents’ health insurance plan until their 26th birthday.

House Republicans have kept that guarantee intact as they seek broad support for their efforts to repeal and replace the ACA. However, it is unclear whether this provision will be a success or a destabilizing force in the insurance market.

Because it has diverted young, healthy customers away from the overall marketplace “risk pool,” the policy has proven to be a double-edged sword for the ACA’s online health exchanges. Insurers require those customers to balance out the large number of chronic illness enrollees who drive up insurer costs and, as a result, contribute to higher marketplace premiums.

According to Joseph Antos, a health economist with the American Enterprise Institute, a conservative think tank based in Washington, D.C., the ability for young adults to remain on family plans represents a “critical mistake” within the health law, cutting insurers off from a large, healthy demographic that would likely be able to afford a health care plan.

“This is essentially an ideal group for an insurance company,” he said. “They’re not going to use many services, and they’re going to pay their bills.”

The young-adult provision took effect in September 2010, and families quickly took advantage of it, with many young adults leaving their own insurance plans. According to a 2013 CDC report, the percentage of adults ages 19 to 25 with personal plans fell from nearly 41 percent in 2010 to just over 27 percent in 2012, while the proportion of those covered by a family member’s plan increased by 14 percentage points.

And, according to the Department of Health and Human Services, final 2016 marketplace enrollment figures showed that more than 6 million people aged 19 to 25 gained insurance through the health law, including 2.3 million who joined their family health plan between September 2010 and the launch of online marketplaces in 2014.

According to Cara Kelly, vice president of the health care consulting firm Avalere Health, the effect of the provision must be understood in the context of the law’s implementation. Kelly believes that affordability and the variety of plans available in the marketplace may have influenced young adults’ decision to purchase or forego insurance. Even if the provision had not been included in the law, she believes the young adults would not have signed up for coverage.

According to data from the Department of Health and Human Services, a little more than a quarter of marketplace customers in 2016 were adults aged 18 to 34. However, federal officials and insurers had hoped for higher rates, noting that the group accounted for roughly 40% of the potential market.

The public’s support for the young-adult provision makes repeal difficult. According to a Kaiser Family Foundation survey conducted in December 2016, 8 in 10 Republicans and 9 in 10 Democrats supported the benefit. (The foundation’s Kaiser Health News is an editorially independent program.)

“It has been extremely popular,” said Al Redmer Jr., the Maryland insurance commissioner and chairman of the health insurance and managed care committee within the National Association of Insurance Commissioners. “So with that being the case, I don’t know if politically there’s an appetite to unwind it.”

Republicans have chosen measures other than the ACA to attract more healthy, young customers and keep risk pools vibrant. The bill allows insurers to charge older people up to five times more than young adults in order to keep prices low for these customers. That difference is three-to-one under the ACA, which Republicans claim has made prices too high for younger customers.

It would also replace the individual mandate, which requires almost everyone to have health insurance or face a penalty, with a 30% surcharge on premiums for late enrollment or allowing your insurance to lapse for more than 63 days in a year.

According to a Congressional Budget Office analysis, the overall effect would be a more stable market with a greater number of healthy enrollees. According to the report, the bill could result in an additional 24 million people being uninsured.

However, the bill contains disincentives for those young people. Low-income people will receive tax credits based on their age and household income to help pay for premiums. Older customers would receive $4,000 per year, which is twice as much as younger customers.

Insurance companies have reacted cautiously. This month, the Blue Cross Blue Shield Association issued a statement expressing support for increasing affordability for younger enrollees. However, it raised concerns about the Republicans’ proposed tax credit. A benefit based solely on age “does not provide healthy people with enough incentive to remain in the market, particularly in the absence of an individual mandate.”

America’s Health Insurance Plans sent a letter to House Republican committee chairs expressing support for the 5-to-1 age-band rating and age-based tax credits.

“We have stated previously that there is no question that younger adults are under-represented in the individual market,” the letter said. “Recalibrating and reforming the way in which the premium assistance is structured will encourage younger Americans to get covered.”

Mary Agnes Carey, a KHN reporter, contributed to this article.

Kaiser Health News (KHN) is a national news service covering health policy. It is a program of the Henry J. Kaiser Family Foundation that is editorially independent.

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