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Insurers pay $147 million to cover young adults under Obamacare

Teresa Tanoos's picture
Insurers pay $147 million tab for young adults under Obamacare

If there’s one aspect of the Affordable Care Act (ACA) that is popular among young adults, it’s that it requires insurance companies to cover those 19 to 25 years of age under their parents’ private health insurance plans.

Otherwise, these young adults would likely not obtain health insurance on their own – at least that’s what researchers of this particular provision report in a special article published May 30, 2013 in the New England Journal of Medicine.

Indeed, proponents of the health reform law, commonly referred to as “Obamacare”, claim it will shift costs from hospitals, taxpayers and families to health insurance companies.

Accordingly, a group of researchers from the RAND Corporation conducted a study to determine how the implementation of this provision changed rates of insurance coverage for young adults seeking medical care for major emergencies.

The group set out to see if the provision covering young adults would actually help them in the emergency room, which is where young adults are most likely to seek care if they are seriously ill or injured.

The primary reason young adults don’t bother to obtain health insurance is because they are less likely to have the same health problems that their older parents get, such as heart disease, diabetes, cancer, strokes or arthritis, the researchers reported. On the other hand, young adults are more likely than their parents and other older adults to have accidents, which can be expensive without health insurance, especially for treatment in the E.R.

“We purposely looked at a narrow set of conditions, things that were painful and serious, things that people would seek emergency treatment for regardless of whether they had insurance,” said researcher Katherine Harris, adding that such conditions included broken bones, head injuries and acute appendicitis.

“We evaluated more than 480,000 of these non-discretionary visits from 2009 through 2011,” Harris told NBC News.

Harris and the other researchers from the RAND group found that more than 22,000 newly insured young adults visited emergency rooms for treatment over time – up by more than 3 percentage points. They reported that over the course of one year, insurers picked up a $147 million tab in claims for these patients, which would have otherwise been paid by the patients, their families, taxpayers, or absorbed by the hospitals.

The researchers concluded their report by stating that the 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.

Harris says that the report’s findings represent how health reform is working and whether it’s truly shifting costs.

“We wanted to make sure that what was anticipated actually happened,” she said.

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However, not everyone agrees that Obamacare is going to turn out as anticipated by its proponents.

Fox News reported today that new health insurance rules under ObamaCare could lead to a host of personal insurance plans being canceled as early as this fall – and, if that happens, a great deal of consumer confusion is anticipated.

Under the federal health reform law, policies that cannot meet new insurance plan standards may be cancelled; thus, individuals and some small businesses that rely on those plans will have to find new plans.

The goal of Obamacare is to ensure that most insurance policies offer a basic set of coverage, consistent with the administration's plan to cover most of the nation's 50 million uninsured. However, such goal appears inconsistent with Obama’s promise that, "If you like your health care plan, you'll be able to keep your health care plan."

For example, most state insurance commissioners are giving insurance companies the option of canceling existing plans or changing them to comply with new federal requirements. However, large employer plans that cover most workers and their families are unlikely to be affected.

According to the Associated Press, the National Association of Insurance Commissioners reports hearing that many carriers will cancel policies and issue new ones because it’s easier from an administrative standpoint than changing existing plans.

However, some say the transition may be so easy.

"The impending changes ... have the potential to cause policyholder confusion," said Iowa Insurance Commissioner Nick Gerhart to insurers in a recent memo to insurers.
Across the nation, a significant number of people could be affected by the cancellations.

"You're going to be forcibly upgraded," said Bob Laszewski, a health care industry consultant. "It's like showing up at the airline counter and being told, 'You have no choice, $300 please. You're getting a first-class ticket, why are you complaining?'"

Other challenges are also anticipated as the new health care law rolls out from state to state, including the prospect of unaffordable premiums for smokers if states don’t choose to waive them. Then there’s a new $63-per-head fee that will hit companies already providing coverage to employees and dependents, as well as a long-term care insurance program that had to be canceled because of the risk it could go belly up.

Nevertheless, and despite repeal efforts by congressional Republicans, Obamacare is rolling out as scheduled.

"Beginning in October, individuals and small businesses will be able to shop for insurance in the marketplace, where we are already seeing that increased competition and transparency are leading to a range of options for quality, affordable plans," said Health and Human Services spokeswoman, Joanne Peters, in a prepared statement.

SOURCE: 1. New England Journal of Medicine, “Insurance Coverage of Emergency Care for Young Adults under Health Reform”; 368:2105-2112, May 30, 2013; DOI: 10.1056/NEJMsa1212779. Fox News, “ObamaCare to trigger health insurance cancellation notices”, May 30, 2013.