HC Econ Journal Insurance Eligibility

HC Econ Journal

Insurance eligibility improves medical care: study

NEW YORK | Fri Feb 17, 2012-3:20pm EST

(Reuters Health) - a new study suggests young adults are more likely to get care and see a doctor when states extend the time they can stay on their parents' health insurance -- a measure also mandated by the 2010 federal health care law.

The laws are meant to help those over 18, who typically outgrow their parents' plans but have trouble getting full-time jobs with health coverage after high school.

The authors say even though people between 19 and 29 years old make up 17% of adults under age 65, they account for almost 30% of the uninsured.

"Ultimately, these state laws, and the provision within the Affordable Care Act (ACA), help provide secure footing just when these young people are starting off on their own," said Dr. Alexander Blum, the study's lead author and a health policy researcher at Mount Sinai School of Medicine in New York.

In September 2010, the federal government enacted a provision that allows young adults to stay on their parents' private insurance plans through age 26.

For their analysis, Blum and his colleagues looked at 19- to 23-year-olds living in states that passed laws extending their parents' coverage in 2005 or 2006, but did not include Massachusetts because it mandated health insurance.

Blum's team used a national survey conducted by the Centers for Disease Control and Prevention (CDC) that asked about access to care.

In the years before the state laws' enactment -- 2002 to 2004 -- about 62% of the survey respondents could identify a primary doctor and about 77% had had a physical exam in the last two years.

A few years down the road - in 2008 to 2009 -- the researchers observed modest improvements in those numbers to about 66% and 81%, respectively.

In the states that extended coverage, about 20% of the young adults reported during the earlier study period that they went without care due to cost. That number decreased to about 18% between 2008 and 2009.

Overall, those were modest improvements over states that did not pass laws extending coverage. And the number of young adults with insurance coverage rose about half a percentage point regardless of whether the state enacted a law or not.

Writing in the journal Pediatrics, Blum and his colleagues suggest this can be explained by the laws encouraging young adults to move to their parents' plans from less comprehensive coverage.

The authors cannot say for certain whether the differences were caused by the new state laws because the CDC's survey did not ask whether the young adults were covered under their parents' plan.

Alan Monheit, a health policy researcher at the University of Medicine & Dentistry of New Jersey, told Reuters Health that despite limitations of the new study, he believes the insurance extension in the federal law will lead to visible benefits.

"I think that we will see an improvement in coverage with the ACA, and I think the reason is that the ACA now ropes in the self-insured plans," said Monheit.

Self-insured plans are funded by employers and make up a large part of the U.S. health insurance market. The plans were typically exempt from the state laws that extended coverage to adult children, but are included under the federal law.

The inclusion of self-insured plans is just one of the differences between the state and federal laws, Blum's team notes, and they are the reason the ACA's impact will be much greater than that of the state laws.

"Even in the states that had a similar provision, they were much narrower," agreed Sabrina Corlette, a health policy researcher at Georgetown University's Health Policy Institute who was not involved in the new study.

Corlette told Reuters Health that many of the state laws limited their insurance extensions based on whether the young adult was a student or married. The federal law expanded coverage in those categories.

In December 2011, the CDC reported that 2.5 million Americans between 19 and 25 years old were able to get health insurance thanks to the ACA.

The U.S. Department of Health and Human Services said the provision increased the number of insured young adults in that age group to 73% in June, from 64%.

SOURCE: bit.ly/xGkVy4 Pediatrics, online February 13, 2012.

Andrew Seaman (2012) describes a Feb. 2012 study in Pediatrics, where researchers found that increasing the coverage age for parents' insurance plans coincided with an increase in consumption of care for young adults aging into private-pay or employer-paid coverage age limits. The problem is that when minors attain certain age, they are only covered under their parents' insurance if they go to college in most cases, and the cutoff age of coverage even in school is generally 24. Where that age has been increased by law, health care consumption by the young has apparently increased. One of the major differences of the new laws is that they increase parents' self-insured employer plan age, which affects a meaningful number of consumers. This article demonstrates a number of health care economics principles, specifically the supply and demand for health care with and without insurance; the differences employers face bearing cost of health care or not and the effects on their workers; and the effects of regulation on the delivery of health care in a market economy.

If foregone health care bears social cost, where all consumers bear the highest cost of emergency treatment of preventable disease for those who cannot pay and are uninsured, and preventive care has the most effect the sooner implemented, then there may be preventable savings from extending care to more young Americans. If increasing insurance coverage increases preventive care and thus reduces this cost shift, those with insurance and those who can afford health care will enjoy lower costs / more health care, if such coverage is increased, particularly to the young.

Extending mandatory coverage in this way bears consequences, however, that demonstrate how supply and demand interact in nuanced ways in a market for goods with social cost and private incentives to production and consumption, particularly under institutions that encourage health care provision as compensation for employment. If there are three options, private-sector insurance products purchased at the shelf; no insurance consuming health care out of pocket, or coverage as compensation for employment, then measuring the possible results of each becomes multiplied especially where each option carries numerous possible costs and benefits for multiple parties. The consumer would presumably make a choice between private pay insurance compared to the anticipated cost of health care. If that consumer, here a young person many of whom have the least-developed ability to assess risk, anticipates rare emergency health events as costing less than expensive insurance, then they choose to forego insurance. If such need materializes, the uncovered emergency cost is the most expensive and thus probably shifted, mostly to the consumer in price and somewhat to the taxpayer from foregone profits, because if coverage was prohibitively expensive such that the consumer chose to bear the risk, this means less consumption of insurance and direct care for producers, and the highest cost to the public / consumer. The producers have an actuarial incentive to expand coverage especially if younger payers actually consume less care than other payers, but also if expanded coverage induces higher consumption of products than without coverage.

This also shows dynamics between employers, if one identical employer faced less cost by not offering health care ceteris paribus, and would thus outcompete the firm who faced additional cost. Therefore the employer would have an incentive to keep parents' coverage age low, in order to escape the cost of the additional coverage. Mandating employer coverage would seemingly increase cost of employment, but unemployed consumers would demand less coverage and health care in general. The result is an equilibrium between jobs, coverage, public cost, private income and expense, and a curious outcome where age of dependence increases well into a range that conflicts with many other legal precedents like voting or conscription, and perhaps medical and common-sense appraisal of .what is or is not adulthood.

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