JONATHAN COHN SEPTEMBER 21, 2011
About the only good news in last week’s poverty report from the Census Bureau was the news that the proportion of young adults with health insurance was rising. The news stood in stark contrast to the national trend: Among every other group of non-eldelry adults, people were losing coverage, which is what you’d expect when so many people are out of work.
The most obvious explanation for the shift was the Affordable Care Act, which allows young adults (up to age 26) to stay on their parents’ policies if they don't have access to employer-sponsored insurance. But it was just one piece of data and nobody was 100 percent certain that the new health care law was responsible.
Now we have two more sets of data, from a pair of surveys released on Wednesday. And the link to the Affordable Care Act seems even stronger.
One survey comes from the the Centers for Disease Control and Prevention (CDC), the other from Gallup. The CDC survey found that, between the first quarter of 2010 and the first quarter of 2011, an additional 900,000 young adults (18- to 24-year-olds) had health insurance. Gallup’s finding was even more telling. According to that survey, which tracked responses by month, the proportion of 18- to 25-year-olds with insurance rose four percentage points starting in September, 2010—the very same month that the new requirement took effect. As a senior actuary at Towers Watson told the New York Times, “It would be hard to construe [the change] to be anything but the Affordable Care Act.”
At this point, it appears, the real question isn't whether the Affordable Care Act is helping young people get insurance. It's whether the law is imposing other costs in order to accomplish that.
Somebody, after all, has to pay for the bills the newly insured young adults generate. And throughout the health care reform debate, the insurance industry has been warned that every new requirement—whether it’s a mandate to make insurance more available or a mandate to make insurance more comprehensive—will make insurance more expensive. In that same Times story, the actuary and some insurance company spokespeople said they estimated adding young adults to the rolls was raising costs by 1 to 3 percent at some firms.
But some caution is in order. For one thing, it's not as if the law requires insurers to cover young adults for free. If you want to enroll your 23 year old on your company insurance policy, you're going to have to pay whatever the company normally charges to add dependents. (Of course, not all companies do.) In addition, young adults are notoriously cheap to insure; the incremental cost of adding a million of them to company rolls is probably pretty small, overall.
Finally, and most important, the law anticipates these at least some requirements on coverage will, on their own, raise the price of health care. But, over the long run, it should offset that increased cost by introducing a host of other reforms—from changing payments in Medicare to taxing high-end private insurance—designed to reduce costs.
As a whole, the Affordable Care Act is really two sets of changes: One set that will make health care more expensive and one that make health care less expensive. Better still, the most reliable estimates we have suggest the latter will be bigger than the former, which is a convoluted way of saying that, ultimately, the law should actually make health care more affordable even as it makes it more available.