Extending Adult Dependent Coverage to Young Adults: Status and Issues

1
Extending Adult Dependent Coverage to Young
AdultsStatus and Issues

• February 17, 2009
• Presentation to
• New Yorkers for Affordable Health Coverage
• Joel Cantor, Professor and Director
• Rutgers Center for State Health Policy

2
Acknowledgements

• Project team Alan Monheit, Dina Belloff, Derek
  DeLia and Margaret Koller
• Funded by the State Health Access Reform
  Evaluation (SHARE) Program of the Robert Wood
  Johnson Foundation

3
Young Adults at High Risk of Lacking Coverage and
are Large Share of Uninsured
Source Kriss JL, SR Collins, B Mahoto, et al.
Rite of Passage? Why Young Adults Become
Uninsured and How New Policies Can Help, 2008
Update. The Commonwealth Fund, Issue Brief, May
2008. Pub. 1139.
4
Uninsured Young Adults (Age 19-29)
Source Kriss JL, SR Collins, B Mahoto, et al
The Commonwealth Fund.
5
Source of Coverage for Young Adults (Age 19-29)
Source Kriss JL, SR Collins, B Mahoto, et alThe
Commonwealth Fund.
6
Implications of High Uninsured Rate

• Critical developmental period to address risks of
  obesity, smoking, sexually transmitted
  infections, etc.
• Uninsured young adults are two to four times
• more likely than peers to delay/forgo care or an
  Rx due to costs
• less likely to see a medical provider or have a
  usual source of care
• Uninsured young adults 20 more likely to report
  trouble paying medical bills or carrying medical
  debt
• Absence from risk pools has consequences for
  others

Sources Kriss JL, SR Collins, B Mahoto, et
alThe Commonwealth Fund. Callahan ST and WO
Cooper. 2006. Access to health care for young
adults with disabling chronic conditions.
Archives of Pediatric and Adolescent Medicine.
160178-182. Merluzzi TV and RC Nairn. 1999.
Adulthood and aging Transitions in health and
health cognition. In Whitman TL, TV Whitman,
and RD White (eds). Life-Span Perspectives on
Health and Illness. (pp. 189-206). Mahwan, NJ
Lawrence Erlbaum.
7
Arguments for Young Adult Dependent Coverage
Legislation

• Cover more young adults
• Add health lives to the risk pool
• Little or no need for state resources
• Little or no burden on employers
• Voluntary

8
Possible Limitations of Young Adult Dependent
Coverage Legislation

• Federal laws
• ERISA preempts states from requiring employers to
  pay premiums (e.g., NJ law applies only to 33
  of state population)
• IRS code prohibits pre-tax premium payment for
  most over 23
• Possible burdens on insurers or employers
• Administrative
• Adverse risk selection
• Unanticipated consequences
• Impact on other risk pools
• Young adult behavior (e.g., marriage, child
  bearing)

9
Study Goals

• Develop detailed description of state adult
  dependent coverage policies
• Evaluate impact on coverage of young adults
  (econometric study, fall 09)
• Assess implementation and possible unintended
  consequences (four state case studies, early 2010)

10
Detailed State Policy DescriptionProvisions
Possibly Affecting Coverage Impact

• Age limits for students and non-students
• Other enrollment restrictions
• Marital status
• Whether has own dependents
• Residency requirements
• Financial dependence on parents
• Continuous or creditable coverage rules
• Included markets
• Premium rules

11
Enactment Timeline25 states
CT FL ID IN ME MD MO MT MN NH SD VA WA WV
Original enactments shown in black Expansions
shown in blue italics
FL IA KT NJ
TX IL NM
SD CO NJ
MA RI DE
UT
1994
2008
2006
2005
2007
2003
12
Change in Age of Dependent Eligibility
Notes Includes one state (RI) that increased age
limit for part-time students only. Excludes
two states (TX, IA) that eliminated the upper age
limit for full-time students.
13
Change in Age of Dependent Eligibility
No Limit
RI raised age limit for part-time students from
18 to 24 (i.e., treating PT as FT students)
14
Other Provisions

• Unmarried 22 states
• No dependents 4 states
• Other limits
• Most states residency for non-students, but not
  FT students
• 9 states financial dependence or living with
  parents
• 6 states continuous or creditable coverage
• Included markets
• Most states all regulated markets and public
  employee plans
• Premium setting rules
• 12 states cost averaged into group family
  premium
• 8 states establish premiums for new dependent
  enrollees (many require 100 to 102 of child
  dependent rate)

15
Discussion

• How many young adults will be covered?
• Federal law imposes limitations
• ERISA preempts requiring employers to pay
  premiums
• IRS code does not permit pre-tax premium payment
  for most over 23
• States impose eligibility restrictions by
• Marital status
• Other dependants
• Creditable coverage
• Financial dependence on parents
• New Jersey enrollment modest after three years
• 15,000 (approx 360,000 uninsured young adults)

16
Discussion

• Will age rated adult dependent coverage lead to
  exit of good risks from other markets?
• Group coverage
• Unlikely to substitute for employer-sponsored
  coverage in own name (employer contribution and
  pre-tax option would be lost)
• College sponsored plans
• Unlikely to affect risk pool for student coverage
  (same demographics)
• Non-group coverage
• Depends on extent of substitution
• Parents employer group coverage may be better
  but more expensive
• Number of young adults in non-group market may be
  limited under community rating

17
New Jersey Non-Group Market Following 1993 Pure
Community Rating Reforms
Sources 1996 data from Swartz and Garnick and
2002 data from Rutgers Center for State Health
Policy, NJ Family Health Survey
18
Tentative Conclusions/Next Steps

• Federal and state laws may limit impact
• Wide variation in state approaches (age limits,
  other restrictions)
• Consequences for non-group market depends on
• Scale of response to adult dependent coverage
• Number of young adults in community rated
  non-group market
• First data on impact this fall