I know it's not popular, but it is a hill I will die on — "kids" staying on their parent's insurance until they are 26 is likely one of the more regressive parts of the ACA.
Would be far better for those kids to be on marketplace insurance plans … https://t.co/2eUezjOaI4
— Craig Garthwaite (@C_Garthwaite) September 28, 2020
I agree with Craig.
After the ACA exchanges got started and stabilized (so no later than 2015), keeping large numbers of relatively healthy 26 year olds off the Exchanges was a policy own-goal and it is regressive.
The Under-26 benefit relies on a couple of things. First, it relies on the young adult and their parent having a good enough relationship where the parent is willing to do a solid for the young adult. Secondly, it relies on the parent having a good enough job to offer health insurance with family coverage. This simple qualification means that the benefit is mostly restricted to middle and upper class workers. Thirdly, the young adult may or may not be eligible for premium tax credits. It is not at all implausible that an upper middle class family will get more federal support through the hidden tax benefits of employer sponsored insurance than the young adult would receive via premium tax credits.
Furthermore, pulling out several million relatively healthy 19-26 year olds from the ACA pool increases average morbidity in the ACA pool. Higher average morbidity means higher claims expenses and thus higher premiums. Higher premiums are directly borne by anyone who does not receive a subsidy and also any subsidized individual who wants to buy a plan priced above the local benchmark. Federal expenses will increase. The only beneficiaries of higher index premiums are subsidized individuals who want to buy a plan priced below benchmark. This is valuable, but pulling millions of relatively healthy folks out of the pool is an extraordinarily inefficient way of achieving this objective.
So why was this included in the ACA?
I can think of a few reasons. The first is basic politics. This is a very tangible and visible benefit to middle and upper class middle-aged led households for a law that has few other direct and visible potentially positive improvements for that cohort. It could be implemented very quickly and the costs are submerged and second and third order. The second is that there was a long gap between when the ACA was signed and when the two major coverage expansion efforts, Medicaid Expansion and the Exchanges, would go live. This was a reasonable transitional effort. Finally, it could be argued that the administrative burden and the ordeal of a bunch of 18-26 year olds navigating insurance markets would lead to massive coverage losses due to administrative friction.
I am sympathetic to the administrative burden argument. A decent chunk of my emerging research agenda has been decision complexity and confusion. Insurance is fundamentally confusing. Middled aged middle and upper class parents are far more likely to hold insurance as a valuable good compared to young adults. The middle-aged and middle and upper class parents have the combination of learning by doing and far more importantly, knowledge of how to navigate opaque bureaucratic complexes. There could be a reasonable argument that millions of 18-26 year olds would never get coverage because the mechanisms of finding and maintaining coverage were too complex. I am not sure how to design that study right now, but this is quite plausible set of trade-offs. But even if that is the case, the U-26 policy is still regressive as the young adults whose parents either don’t have employer sponsored insurance OR have familiarity with navigating complex bureaucratic systems are likely to be poorer and less advantaged than the U-26ers whose parents have coverage and can navigate complex bureaucratic systems.
I think the U-26 policy is good politics and will be a feature of the US healthcare finance system for a long while but behind a veil of ignorance, it would be gone in a rational redesign of the US systems.
evap
This policy was a great benefit for me personally when my kids were in that transition stage from college to finding their first good job with benefits. I think that without this policy a lot of 18-26 year-olds would simply go without insurance.
beth
My daughter lost her job and insurance three months after having Covid. There is no way she would have been able to navigate the ACA marketplace in the shape she was in (long hauler with multiple medical problems from the virus). In the first month alone on my policy she had nearly $30,000 in medical claims. This policy was a lifesaver, medically and financially. It may need to go away but first let’s work on making the insurance process easier to navigate.
JPL
There’s a real chance that ACA will not be available next year, and I’m not sure what happens then.
Herr Doktor Fliegende Toaster
I suspect this problem will solve itself. After SCOTUS decides 5-4 that the ACA is unconstitutional (opinion Coney Barrett, with Thomas, Alito, Gorsuch and Kavanaugh concurring), the Dem majority in the Senate finally gets rid of the filibuster, Congress passes Medicare for All and puts the cost on the credit card (which is clearly constitutional), and President Biden signs it into law. When the GOP objects, remind them that they spent $1 trillion/yr on tax breaks for billionaires and we’re spending $1 trillion/year on making sure all Americans had health care — which money is better spent? And when the GOP continues to whine about it, remind them imperiously that Elections Have Consequences.
Scott
The other market in this mix is the Student Heath Insurance market for the college kids. I have one kid under 26 who I cover under Tricare Young Adult program which is not included in regular Tricare and requires a premium. The other is in graduate school (living at home) and covered under Student Health insurance sold by Aetna. But I guess the point is that neither is contributing to the ACA marketplace pool.
Chyron HR
I know we’re Democrats but maybe we could try being popular for once?
Lymie
Some of us are Medicare eligible and the premium to cover an under 26 is ridiculous through the supplemental insurance. Good thing she’s a student and we can buy a decent plan though the university.
MJG
Agree 100% with your conclusion (“the U-26 policy is still regressive as the young adults whose parents either don’t have employer sponsored insurance OR have familiarity with navigating complex bureaucratic systems are likely to be poorer and less advantaged than the U-26ers whose parents have coverage and can navigate complex bureaucratic systems”) but wonder if anyone has hard data on the health status and costs of those young adults kept on their parents’ policies. In my family’s case it was a matter of keeping offspring with sky-high health costs on our high-quality job-based plan (and on our dime) as long as possible – and it only helped the ACA risk pool to keep them out of it. I know it’s always risky to extrapolate from personal experience, but it would be interesting to find out if a disproportionate share of those young adults on parents’ plans have expensive health needs.
oldster
I agree with your analysis. It is not ideal from the standpoint of distributional equity, but it was smart politics.
It’s a bit like the decision to give everyone a piece of the SocSec pie. It changed the program from something *those* people (the undeserving poor) get to something *we* (the virtuous middle and upper class) get.
jonas
As the parent of a teenage child with a complicated, long-term health condition, I thank God on my knees every day for the U-26 provision. There is no way when she turns 18 that she will be capable of living independently or having a job or going to a school that provides coverage for all her needs and medications. Knowing we can keep her on our insurance for another 6-8 years gives us a tremendous peace of mind.
Barbara
Stop tinkering. And while you are at it, stop making the better the enemy of the best. Kids between 21 and 26 in particular have irregular income, move around, and are often in between academic programs. My daughter was in her last year of college, then moved from living with us, to Boston for an entry level job and then to NYC for graduate school — all over the 21-26 time period. During that time she lived in four different states. She might have qualified for the ACA in Massachusetts, or maybe not, and she has no income in NYC, so she would not be eligible for marketplace. She would be eligible for Medicaid.
So, like I said, stop playing around the margins. Sure, having people like her in the pool would generally be better for the overall pool but it would make her individual access to health care a lot more precarious.
ETA: If she had migrated to the job market a bit more seamlessly — as my other daughter did — she would most likely have obtained coverage on the exchange or through an employer. Giving people more options shouldn’t necessarily be seen as suboptimal.
boatboy_srq
Pushing the under-26s into the exchange would have merit if the under-26s had decent employment prospects and lighter student loan debt. Otherwise,… not so much.
Anonymous At Work
What’s the health status of the typical U-26 vs. a U-26 on a parental plan? Enough to make a difference at margins or even less? Just thinking in terms of older children with chronic conditions that solo insurance wouldn’t cover as well as a family plan from a person with more senior job experience, such as cystic fibrosis. Those situations are yes, so rare as to be raw, but they are also horribly expensive.
eldorado
would be better if everyone were just covered
frosty
@Lymie: My youngest is a part-time student and part-time worker and the only coverage we could find was Medicaid. He didn’t have enough income for the ACA. Yours doesn’t qualify?
Another Scott
I’m not sure I follow the analysis and/or the logic.
1. Young people often have children before they’re 26 (or at least used to). Birthing, etc., is expensive.
2. Because of 1, family insurance plans are significantly more expensive than the cost of 2 individual policies.
3. The pricing structure means that ACA premiums are set to increase by age bands.
4. Young people got no money, so even if they get a no-cost policy on the exchange, they won’t be able to afford the bills if they do need care.
Couldn’t it be the case, given all that, that the ACA exchanges are on balance helped by the 26 carve out for parents to pay?
As a general rule I like the principle of just make everything simple and universal (and just make the well off pay more), but I’m not sure that it’s a big problem in this case.
Thanks.
Cheers,
Scott.
TomatoQueen
“….First, it relies on the young adult and their parent having a good enough relationship where the parent is willing to do s solid for the young adult.”
Erm. You need more coffee, or else follow for the day a parent of an adult child with Type 1 diabetes or unstable epilepsy or sickle cell trait or asymptomatic HIV (none of which is an automatic approval under SSI). Or some more coffee.
wi blaireau
If inherent complexity and confusion creates decision making paralysis, what is the argument against simplifying the plans offered? What if deductible and coinsurance were fixed for all plans on a tier. Then insurers compete on network and cost. What do you think the practical outcome of that would be?
Belafon
Imagine being 18 or 24 and trying to figure out what insurance you should buy, and having to pay copays. That’s not something they’re going to think of very well. It’s far better at that stage for the parents to be taking care of it until they are more responsible.
The market isn’t the solution to everything.
My son, at 24, called my wife in the middle of the night complaining about pain in his abdomen. Because he wasn’t worrying about insurance, he went to the hospital, which was good because his appendix had decide it was done. Had he been worrying about insurance, he might have decided to wait.
Hildebrand
I’ll add two pieces of anecdata:
1. Our son (24) is a grad student – he needs regular physical therapy for a leg condition with which he was born. PT staves off the need of a wheelchair. If he used the university policy offered, no coverage for PT. Staying on ours covers him completely.
2. A good friend works as a manager at Lowe’s. He contracted Covid and was hospitalized, his insurance through Lowes covered him completely. His 25 year old son also contracted it – because he was under his Dad’s coverage – fully covered. Both have recovered – thankfully.
Just two stories – but sometimes we need to see that the policy was a completely good thing out in the everyday of people’s lives.
Fair Economist
My family’s employer-driven policy charges the same family rate to us regardless of the number of children. Makes no sense to me; I assume it’s intended as a benefit for quiverfull families. The provider is Mercer, so malicious motives are plausible. No, we have no choice in it being Mercer.
BruceFromOhio
I’ll wager neither of you have children in that age group.
BruceFromOhio
@evap: This. It’s what I and all of my siblings did back in the day when the parents health care train pulled out. Insurance? AYFKM? Flu shot? I just laid in bed when I got sick and hoped I didn’t croak. Stitches? Fuck that, man, wrap it tighter and get your ass back to work. Health maintenance? Get out my house, you’re talking crazy. You hit the emergency room only when someone else (EMS, Mom, concerned roommate who has a car) forced you to go.
The ACA is totally worth fighting for, and I understand this. Dropping existing conditions clauses and insuring my children until they are stable enough to insure themselves have been game-changers for my family in immediate and personal ways.
I’m sorry it’s regressive to the models. Just back away slowly, please.
Hortense
Wasn’t the status quo ante that under-26s were only covered if they were in college? This is profoundly elitist and unfair. Why should a factory worker whose son can only get a job as a clerical temp not be able to put her children on her health insurance?
Not all families can afford to send their children to college, even community college. Covering under-26 dependents for EVERYONE, not just the middle class/rich people who’ve groomed their kids for college from the get-go, was positive and progressive, and the notion that an 18 year-old can find a job with health insurance benefits in today’s economy is a very strange fantasy.
But as someone else has noted above, this is all moot once the ACA is gutted. There won’t be any republican replacement that provides health insurance to poor people.
piratedan
and this treatise is exactly why health insurance shouldn’t be left alone in the hands of the people who solely crunch numbers. Sorry, but Dick Mayhew would have understood that… ///////
not every mathematical solution comes out with a zero sum, sometimes (often-times) there are remainders, the under 26 provision in the ACA is an excellent reminder of that. You want everyone from 18-26 in the pools, then figure out a way that all of them are employed and have a job where their employer pays for their health care.
Barbara
@BruceFromOhio: I know, imagine thinking that THIS is the hill someone would choose to die on — how to make things marginally worse for people who are already pretty marginalized. Oh way to go health care policy expert!
Ruckus
@BruceFromOhio:
I don’t have kids and I had a job that provided health care insurance when I was between 18-26, except when I was in the service, where I had healthcare provided. I still agree with you 100%, those years 18-26 for most are either school, job hunting or crap jobs where if they would have insurance it would be crap. Granted most don’t need insurance, but how many actually do at some point or are ongoing insurance users?
Not everything is cut and dried in life, especially in a life at this age and in this day and age. Not all parents can or do have healthcare coverage and Medicaid is to healthcare what the coroners van/office is to a multi thousand dollar funeral. (I’m an old, in case no one remembered, and I live in a seniors complex at the moment. Paramedics, coroners van/mortuary vehicles are not all that uncommon here. Have seen the paramedics here on several occasions more than once in the same day.) Life goes on, but it can be messy for anyone. There is a really good reason that kids to 26 were put in the ACA program in the first place, actually a few good reasons. They should stay there. At least until we get mandated 100% coverage/healthcare that actually is. BTW I don’t expect this in my lifetime, not in this country, with it’s pay up or die attitude of so many, about so many parts and bits of society.
Ruckus
I also can see David’s point. 18 is adulthood now, you can vote and almost everything else adults can do. You can make crappy decisions all on your own, not that people between 18-26 haven’t been making crappy decisions for ever. Hell 26 isn’t the cutoff point for crappy decisions, any more than 76 is. Our healthcare and healthcare insurance concepts are crap in this country, especially if you compare them to many other countries. We have, if I’m not mistaken, the most expensive healthcare in the world, without results to show for that. We have a government rather involved in our healthcare in many ways, and nearly half our population belonging to a political party for which their main concept of healthcare is don’t improve it, but fuck off and die. And even with all that money and government concern, we are many steps back in the world of actual healthcare. And I understand this because my healthcare is fairly decent, the largest single healthcare entity in the country, and run by the government. (It’s not perfect of course but it’s not bad care.) It’s the VA. If you are at all snooty, you would hate it. It’s an HMO with longer waiting times. But the actual medical needs get met. Many do far worse.
My point is that anything that actually improves or might improve our healthcare should be looked at, because we need and pay for better healthcare, but a lot of us are not getting that at all. Several of the hospitals in my area have been bought up by a company whose sole concept of healthcare is do the least possible for the most money. IOW a normal American business model. I was an emergency patient last year and I would have been better off to not have gone. And the bills were in the thousands range. For doing absolutely nothing at all.
We need a lot of structural change in this country.
Racism is an obvious ongoing problem.
We have a wealth class out of control, we have poverty and a major lack of healthcare in many segments of our society, even with the ACA. Our economics are crap because it’s all for the wealthy to get wealthier and the rest of us to fuck off and die. We pay far more for a military which we use to try to control the world and that’s working so well. We fail to understand that many parts of the world have moved on while we wallow in our self induced wonderment of our greatness. We elected a pissy moron as president, who is so far away from an acceptable human being as to be almost but not really funny and has a small but not out of the realm of possibility of being reelected after setting us back 2 centuries.
This country has
someseveral toxic problems and the concept of how we don’t do healthcare well at all is one of them. Any concept that might make it better should be looked at.way2blue
Hmm. I thought the rationale—at the time ACA was crafted—was that young adults are moving around a lot. In & out of college, grad school, jobs. Moving from state to state. I know that was true for my kids. One turned 26 while home for winter break, his extra month of health insurance on our family plan ran out 6 days before he was to fly back to Denmark. I called around trying to get him health coverage for the month of January. And got nowhere. Even Covered California doesn’t want people signing up, then dropping a month later (he had full coverage in Denmark as part of his student visa). So. He went backpacking in Big Sur that week, and came home with a horrific case of poison oak. Ended up bandaging his arms and shoving him on a plane. Once in Copenhagen, he was hospitalized as the Danes hadn’t seen poison oak before, and were worried about infection… And so it goes.
Another Scott
@way2blue: Wow.
:-(
Biden and his team know that we need to do much more to fix the ACA and so much more about our healthcare system. Here’s hoping they have a big enough majority to get things done reasonably quickly.
Good luck to your youngster.
Cheers,
Scott.
StringOnAStick
@TomatoQueen: Even young people with bad diagnoses can have bad parental relationships. When I was that age I got a bad diagnosis that a better doctor/specialist several years later proved was false. My parents still refused to help me buy health insurance because they were right wing nutjobs and I had the temerity to be a liberal and unless I was willing to also become a right wing nutjob, they refused to help me. I sold my car to buy insurance and pay for care.
sgrAstar
Agree with Bruce, Ruckus, and everyone else who has advocated for keeping the kidz on our healthcare plans. That provision is an absolute lifeline in our family- without it, parents and children would be in financial ruin. Brilliant Aspergers kid, struggling slowly to master college and independent life, seriously depressed child hanging on by a thread, pandemic-hammered parents trying to keep the family afloat. These families deserve and need this program. Hey! What if we had Universal Health Care? ??? Let’s go, Dems. We can do this.
?