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December 16 2011

More Young Adults Have Health Insurance (Thanks to Mom and Dad)

Hadley Heath

In a press release yesterday, the Department of Health and Human Services celebrated an increase in the number of insured people age 19-25 and proclaimed that thanks should go to the Affordable Care Act for allowing more families to cover their adult children on Mom and Dad's policy.  I say the thanks should go to Mom and Dad, for paying the higher premiums that come with the extra dependents.  

But that's how ObamaCare works.  It will create a few winners, and mostly losers, by further shifting costs in our health care system.  

At Heritage's Foundry blog, Kathryn Nix takes apart the numbers on the celebrated increase.  

Undoubtedly, it’s true that some of those individuals did get coverage due to that provision, but HHS claiming credit for Obamacare for all of the increase appears to be an example of the classic statistical fallacy of confusing correlation with causation. Even more importantly, over the long term, the net effect of Obamacare’s many provisions will be to increase the already unaffordable cost of health care, which is one of the main reasons young adults and other uninsured forego coverage.

The Administration claims that the percentage of uninsured adults age 19–25 declined from 36 percent before passage of Obamacare to 27 percent in the second quarter of 2011, a decrease of 2.5 million individuals. In fact, the report they reference shows that uninsurance in that age group actually dropped from 33.9 percent in 2010 to 28.8 percent in the first six months of 2011, a decrease of 1.3 million.  

Moreover, the data also show the same coverage trends for older, working adults. Between 2009 and 2010, the number of uninsured grew, but then, between 2010 and 2011, it fell. It thus seems likely that at least some portion of this variation in coverage was due to the U.S. entering, and now beginning to exit, a recession. As individuals lose jobs in a recession, many lose their health coverage, and as an economic recovery occurs, the opposite occurs.  

Nix goes on to explain how the Affordable Care Act will actually make insurance less affordable for everyone - and especially for people who are young and healthy.  

Even if young adults do stay on their parents’ plans, they don’t face a pretty scene once they become too old to do so. Several independent studies have shown that the biggest increases in premiums will fall on the young and healthy purchasing insurance in the individual market. MIT economist Jonathan Gruber and Gorman Actuarial show that, in the state of Wisconsin, those age 19–29 who purchase insurance in the individual market will see an average increase in their overall premium of 34 percent.

The regulations and requirements that ObamaCare put on the health insurance industry will destroy competition and leave consumers with fewer choices.  Personally, I'm currently on a very cheap, high-deductible plan that I think young, healthy adults would find attractive, but I can't be certain that the government won't force me to buy a plan with a lower deductible (and therefore higher monthly premiums) in the near future.  

It's easy to see the economics of it: Young adults are needed to fund more robust, government-mandated coverage for people who are sick and expensive.  It's a socialization of the costs.  From a young adult's standpoint, it's obvious we are about to get ripped off.  

But hey, add it to the list: If we are already working and paying taxes into Medicare and Social Security, then we're getting robbed in more ways than one!

It makes absolutely no sense to require insurers to offer family bundles that include adult children.  If insurers could make money by offering this type of policy, and if families are willing to cover their adult children (which clearly some families are!), then insurers would offer this product on their own without a government mandate.  

But from a philosophical standpoint, the age-26 rule is downright insulting.  If we really are young adults, then why does the government treat us like babies?  That's my question for President Obama and for anyone who supports a provision that lands more "children" on their parents' policies until their 27th birthday.  

I understand that Mom and Dad are for many Americans (including myself) the first and best form of financial "safety net."  If I get in trouble, I'm calling them.  But let's face it: Most people don't like calling their parents and asking for money - especially after college.  (Perhaps for some - cough, Occupiers, cough - it's easier to ask the government to forgive their student loan debt than it is to ask for help from their families.)  What young people want isn't to hand Mom and Dad another bill.  They want to be independent and self-sufficient.  Remember this video from a video contest at Independent Women's Voice?  I think it says it all:

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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