600,000 Young Adults Already Taking Advantage of Healthcare Reform Law Provision

More than 600,000 young American adults are taking advantage of the healthcare law provision that allows people under 26 to remain on their parents’ health plans, a pace that appears to be faster than the government expected.

WellPoint, which insures 34 million Americans, said the dependent provision was the reason why 280,000 new members were enrolled.  That was approximately one-third of its total enrollment growth in the first three months of the year.  Other large insurers have added thousands of young adults.  Aetna added approximately 100,000; Kaiser Permanente, about 90,000; Highmark Inc., about 72,000; and Health Care Service Corporation, about 82,000.  The Department of Health and Human Services (HHS) believes that about 1.2 million young adults will sign up for coverage in 2011.

The (college) coverage will probably end in August, but students should check the date,” said Aaron Smith, co-founder and executive director of the Young Invincibles,  a Washington-based non-profit healthcare advocacy group for young adults.  “It’s an important piece of information.  They could have a gap in coverage.”  The group has created guidelines to help new grads understand their health insurance options.  Thanks to the ACA, young adults can remain on their parents’ health insurance until their 26th birthday, even if they’re in school, financially independent and even if they’re married.  The sole exception is if they have health coverage through their own employer.  In those situations — even if the policy is bad — they can’t remain on their parents’ plan.  Young adults have one of the lowest coverage rates, estimated at as much as 30 percent.  The healthcare reform overhaul has helped make a dent in that figure.

Adding young adult coverage increases the average family premium by approximately one percent, according to federal estimates.  Unfortunately, graduating students who are currently uninsured don’t get a special enrollment opportunity under the law, says Smith, and must wait until the next annual enrollment period to sign on with their parents’ plan.

Not surprisingly, some employers are concerned about having to pay for additional coverage for their employees’ offspring.  Helen Darling, CEO of the National Business Group on Health, which represents more than 300 large employers, said employers generally don’t like adding anything to their health costs.  “I don’t think anyone is eager to spend more money,” Darling said.  “This is not something employers would have done on their own.”

According to insurers, the growth in young-adult enrollment comes as the industry began reporting 1st quarter earnings shows better than expected profits.  Carl McDonald, a Citigroup analyst, said that the higher profits aren’t related to the new enrollees but rather because most of the increase in young people’s enrollment has occurred among self-insured employers; in those firms, insurers act as administrators and assume no financial risk.  McDonald said the majority of insurers’ profit increases is due to their customers using fewer health services, particularly hospital care.

“We are pleased to see the embrace of this key provision of the Affordable Care Act,” said Jessica Santillo, a spokeswoman for HHS.  “Young adults are more than twice as likely to be uninsured than older adults, making it harder to get the health care they need, and putting them at risk of going into debt from high medical bills.”

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