Family Health Policy – An Outlook

Thomas Mahoney, a 21-year-old uninsured network engineer & a part-time student of Dublin, Ga., has become a patient of epileptic seizure last December who eventually lost his health insurance at the age of 19. He was no longer eligible for coverage under his father’s policy because he wasn’t a full-time student.

Almost all states that regulate insurance plans for small- and medium-sized employers, fix a maximum age limit for coverage of dependent children. This limit is usually 19 for non-student and 23 for full-time college students.

Mahoney is one of 13 million plus people between the ages of 19 to 29 without health coverage. Many are just starting out in their careers who never had a serious health problem so far. Some people term this age group as all-resistance to major diseases and care nothing if they have health coverage or not. But unexpected does happen. A good example is Thomas Mahoney.

States now are looking at this group of young people who seek to reduce the number of uninsured.

Since the past two years, 17 states have passed laws that let young adults stay on the family policy until their mid twenties. New age limits range from 24 in Delaware, Indiana and South Dakota, to 30 in New Jersey. Eleven states settled on age 25, according to the Commonwealth Fund that conducts health research.

Barack Obama, a democratic presidential candidate has also picked up on the trend. Part of his health program would let young people up to age 25 continue to get coverage through their parents’ health plans.

The Commonwealth Fund projects that 1.4 million people would gain health insurance if every state extended dependent coverage to at least 23.

State lawmakers, the National Conference of Insurance Legislators who specialize in insurance regulation will vote on a policy recommendation in two weeks to come that supports increasing the availability of dependent benefits up to age 25.

The insurance industry says the extensions cause insurers to pay for care that consumers previously paid for out of their own pockets. When insurers have to pay more claims, they have no alternative but to raise premiums to cover those claims. For the most part, employers bear the added cost.

Mohit Ghose, a spokesman for America’s Health Insurance Plans, said it’s too soon to know how much insurance costs went up in states that extended eligibility for dependent coverage. When evaluating the additional requirements, he said, each one by itself amounts to a small increase in the cost of a policy, usually adding less than 1 percent. But, eventually, those mandates add up. Eventually, they can price health coverage out of range for some employers and their workers, he said.

“Sometimes when states jump on a bandwagon, it’s not necessarily the right bandwagon for the people they’re trying to help,” said Susan Laudicina, director of state research and policy at The Blue Cross and Blue Shield Association.

A better solution is to let insurers offer a mix of plans that appeal to young adults, Ghose and Laudicina said. Such plans typically have low monthly premiums but require the patient to pick up a large chunk of initial medical expense. Plans targeting young adults tend to cost less because those age 19-23 generate about $1,500 in medical expenses a year compared to $3,200 for those 30-49 or $6,300 for those 50-64.

J.P. Wieske, the council’s director of state affairs, said that staying on a parent’s policy could come back to haunt young adults who develop serious health conditions. Once they develop a serious condition, just like Thomas Mahoney did with epilepsy, they’ll find it almost impossible to get insurance. But if they get their own health insurance before the problem hits, they’ll have coverage that cannot be terminated.

“The sooner they can get on their own policies, the better off they’ll be,” Wieske said. “The rates will be cheaper and they’re buying something they can keep with them. Wieske is particularly critical of New Jersey’s law, which extended dependent coverage in some cases to age 30.

But Sarah Collins of the Commonwealth Fund said she believes the state’s approach made sense.

“One of the fastest growing age groups in the uninsured are 19 to 29 year old. Between 19 and 23, you’re somewhat protected by your parents plans,” Collins said, referring primarily to college students. “But, this age group, from 24 to 29, you really are a new entrant in the labor force. When you are a new entrant to the labor force, you’re more likely to be employed by companies that don’t offer coverage.”

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