Obamacare: Relevant for the Young and Invincible?

Young and invincible -that is how we, as twenty-somethings, see ourselves. This outlook has led to diminished interest in the effects of Obama’s national health reform among our generation. But as the Affordable Care Act roles out, we have been thrown into the ringer: one of the biggest concerns raised by health reform opponents is the potential for premiums to rise for young adults because of coverage expansions. Lately, numerous studies and articles have been published on the potential for “rate shock” for the young and healthy, touting that premiums for this demographic will skyrocket come 2014. Importantly, none of these articles or studies accurately represent the true scope of benefits and costs or address the numerous protections written into the bill to prevent drastic rate changes, including putting an end to discriminative practices that are commonplace in our current markets.

The absolute number of people who will see increases in their premiums is small. The people affected are limited to those purchasing insurance in the individual market, which means going out and independently purchasing an individual or family plan. Employee sponsored coverage is in the group market and, with the power of group purchasing, is protected from the rate increases predicted to occur in the individual market. To give a sense of how small this is, in 2010, over 60% of employed 19-44 year-olds were offered coverage through their employers. Of those offered coverage through employers, 46.6% of 19-25 year olds and nearly 73% of 26-44 year olds enrolled in this coverage. This means over half of this age group is covered through their jobs. Of those who are not, 66% of them are eligible to stay under parental insurance coverage until age 26. Of the remaining pool of young adults, 92% of those that are expected to enroll in individual plans through the Exchanges have incomes below 3 times the federal poverty level (that’s over 45k per year) and would see no premium increases at all due to income-based federal subsidies to purchase health insurance. Young adults will also have the option of enrolling in a catastrophic coverage plan that covers the same benefits but offers lower premiums with a higher deductible. The impact of premium changes once the ACA hits in 2014 will be substantially attenuated by these safeties..

Those primarily impacted by rate changes are young men between the ages of 19-27, who make over 400% times of the federal poverty level and are not covered through their employers. And even these individuals will only experience moderate annual premium changes – on average an increase of 10-13% compared to current rates in the individual market.  Exactly who this encompasses is unclear – because it means that an individual has a substantial income, typically through an employer, but is not insured. This group could include the self-employed, or those who opt out of their employer sponsored insurance. Taken together, it is inaccurate to say that nobody will experience rate changes, but it is important to understand the relative impact and scope of young people affected.

Beyond maintaining rate changes for most 20-somethings, everyone is experiencing increased value per health care dollar through better benefit packages and limits on how much patients can pay out-of-pocket. New plans will be required to meet certain standards of benefits, including covering maternity, mental health, prescription drug coverage, and charging no co-pay or deductible for preventive services including screenings and contraception. A recent New York Times article demonstrates how inadequate current health insurance packages fail to cover basic services by relating an insured couple’s experience paying for pregnancy and maternity care out of pocket. The new standards ensure value and quality across the board, making strides towards ending the accrual of staggering medical debt arising from skimpy coverage.

The law also makes the system fairer across gender, age, and  pre-existing health status.  It is common among insurers to charge women more than men simply because they have the potential to incur more costs through maternity care. This unfair practice costs women in the private market approximately $1 billion per year and will be outlawed under the ACA. Similarly, insurers are allowed to charge older adults significantly higher rates. The ACA places limits on this practice such that older people can only be charged a maximum of three times their younger counterparts. This change reflects a more accurate approximation of the health cost differences between young and old. We will be thankful for this when we get older. Finally, the ACA ends discrimination of those who have preexisting conditions by prohibiting insurance companies from refusing to cover or charging individuals more who have already had a significant health event or live with a chronic condition. This is not irrelevant for young adults, since 16% of 16-24 year olds have preexisting conditions and either are unable to gain coverage or are paying high rates.

When it all shakes out, the benefits of the ACA for young adults far outweigh any potential costs. Polls indicate  that most young people embrace public programs like Medicare and Social Security, which are based on the principles of cross-generational compromise and shared risks. This is no different. Come January 2014, the ACA goes into full effect. This means now is the time when the media is saturated with mudslinging and accusations, and means it is even more important for us to put aside our shortsightedness and, through our collective voice, advocate for changes that will ensure access to any necessary medical services at a fair price. After all, we will not be young and invincible forever.

Sarah Gordon is a SM Candidate at the Harvard School of Public Health