Provision allows dependents to stay on parents' insurance until age 26
The provision of the Affordable Care Act, popularly known as "Obamacare," that allows young adults up to the age of 25 to stay on their parents' health insurance plans shifted at least $147 million in health care costs from patients and hospitals to insurance companies in 2011, according to a new study by researchers at RAND Corporation.
That provision, which went into effect in September 2010, was one of the first major parts of the Affordable Care Act to take effect, allowing young adults to stay on their parents' health plans until their 26th birthday.
The Centers for Disease control estimates that the dependent-coverage provision expanded insurance coverage to about 3.1 million adults between the ages of 19 and 25. The RAND Corporation study was published Wednesday in the New England Journal of Medicine.
According to the study, the percentage of visits to the emergency room by uninsured young adults fell 9 percent in 2011 and the number of emergency visits by young adults covered by private insurers increased 5 percent.
"We're thinking that prior to the Affordable Care Act, that $147 million would be picked up by patients, their families, the hospitals that care for them and perhaps the tax payers that serve as a backstop to hospitals," says Katherine Harris, a senior economist with RAND. "We're seeing that instead, insurance is doing its job and picking up those costs."
Though just a drop in the bucket for the nearly $2.6 trillion American health care industry, the provision allows many young people who wouldn't otherwise have health insurance to save themselves from financial ruin in the case of unexpected emergencies, Harris says.
"Enactment of the dependent-coverage provision was associated with a significant increase in the proportion of young adults who were protected from the financial consequences of a serious medical emergency," the study suggests. "Because most young adults are healthy and have limited income, many opt not to purchase group coverage ... lack of health insurance leaves young adults and their families financially vulnerable to the consequences of a major illness or injury."
The Affordable Care Act requires insurers to charge young adults the same amount they would for any other dependent. On average, a family insurance plan costs employees $4,316, according to the Kaiser Family Foundation / Health Research & Educational Trust 2012 Employer Health Benefits Survey, a 4 percent increase over 2011 rates.
Data for the RAND study was taken from 392 general hospitals that had emergency rooms. "Nondiscretionary visits" studied included fractures, poisonings, dislocations, head injuries, ectopic pregnancies, appendectomies and foreign body insertions.
Harris says that overall, the savings "aren't huge," but that the provision had the anticipated impact and that expanded insurance "has resulted in financial protections for people who suffer from this subset of conditions."
The Affordable Care Act has been controversial since it was passed in 2010. So far, the majority of the law has survived a Supreme Court challenge and 37 attempts to repeal it by Republican lawmakers in the House of Representatives. On Jan. 1, 2014, the provision of the law that would charge a tax to Americans who don't purchase health insurance takes effect.