• How has Obamacare’s dependent coverage provision increased insurance rates of young adults?

    Of the Affordable Care Act’s coverage expansion provisions, one of the earliest to go into effect, in September 23, 2010, was the requirement that insurers extend dependent coverage of family plans to dependents up to age 26. There has been some debate about the extent to which this increased the insurance rate among young adults. The most likely estimates of its effect are consistent with that suggested by prior research on similar provisions at the state level.

    Analysis of Survey of Income and Program Participation data by Yaa Antwi and colleagues found that young adults covered on their parents employer-sponsored insurance plans rose by about 2 million individuals between October 2010 and November 2011. However, some of these young adults had prior coverage, so the increase in coverage among the uninsured was much smaller, about 1 million individuals; this represents an increase in insurance rate among young adults of 3.5 percentage points. A June 2012 Department of Health and Human Services Issue Brief reported that by December 2011, about 3 million additional young adults gained insurance coverage (a 10.4 percentage point increase), though others suggest the figure is probably closer to 2 million (a seven percentage point increase). Work by Sommers and colleagues suggests that coverage gains for young adults were up 6.7 percentage points between September 2010 to September 2011.

    How do these estimates line up with what is suggested by analysis conducted prior to the law (some of which was published after its passage)? A 3.5 percentage point increase in the insurance rate among young adults is consistent with government predictions made prior to ACA implementation.

    Other work exploited variation in state dependent coverage laws that predated the ACA to assess their impact on insurance status of young adults. The earliest such laws passed in 1995 in Nevada and Utah, the former requiring plans with dependent coverage to extend it to dependents through age 24, the latter through age 26. Both states require dependents to be students and unmarried, but those requirements are not true of all such state laws. Since 1995, 33 other states have passed dependent coverage laws, with age cutoffs ranging from 22 (South Carolina, passed in 2008) to 30 (Nebraska and Pennsylvania, both passed in 2010).

    Phillip Levine and colleagues conducted an analysis based on those state laws and found that they reduced the young adult uninsurance rate by three percentage points but that a similar, national regulation, such as that included in the ACA, would reduce the uninsurance rate by seven percentage points, consistent with some of the findings described above. The difference in effect size is due to the fact that state dependent coverage laws are not applicable to the approximately 55 percent of firms that self-insure (i.e., directly take on the risk of coverage as opposed to contracting with insurance companies to do so), but a federal law would be (and the ACA is). Alan Monheit and colleagues found a similar increase in dependent coverage as Levine et al., but also that the gains were fully offset by reductions in other sources of coverage.

    On the whole, it seems reasonable from work conducted before and after the ACA that the dependent coverage provision increased insurance rates among young adults. The effect size is probably in the 3-7 percentage point range, though future work might offer more precise estimates.

    UPDATE: Work by Sommers et al. added.

    @afrakt

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