Expert Commentary

Early impact of the Affordable Care Act on health insurance coverage of young adults

2012 study in Health Research Services showing that 1.2 million young adults gained health insurance in the first year after passage of the new legislation.

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The effects of the Obama administration’s Affordable Care Act (ACA), signed in March 2010, continues to stir debate. Of course, the law will have different impacts for groups such as the elderly, veterans and young adults. In 2009, one year before the ACA was passed, the percentage of adults ages 19 to 25 who were without health insurance was nearly double the national rate across the entire population.

A 2012 study published in Health Services Research, “Early Impact of the Affordable Care Act on Health Insurance Coverage of Young Adults,” examines the ACA provision that allows adults up to age 26 to enroll as dependents on a parent’s private health plan. The researchers, from Rutgers University and the University of Medicine and Dentistry of New Jersey, control for general economic trends and the interrelationship between the ACA and prior state-level reforms. The study analyzes data from the 2005-2011 Annual Social and Economic Supplement to the Current Population Survey (CPS), which measures health insurance coverage status between 2004 and 2010. To compensate for potentially confounding trends in state economic conditions and health insurance markets, the researchers also use state-level data on unemployment rates, employer health insurance costs and the extent of employer self-insurance.

The study’s key findings include:

  • The percentage of young adults aged 19 to 25 years — the ACA target population — insured by non-spousal dependent coverage rose from 19.1% to 25.1% between 2009 and 2010, representing a growth of 1.2 million young adults. In contrast, the non-targeted control group (adults aged 27 to 30 years) showed virtually no growth in non-spousal dependent coverage during the same period.
  • The number of uninsured young adults in the ACA target population decreased by from 37.3% to 34.9% in 2010, reversing the trend between 2008 and 2009, when the number of uninsured targeted young adults had increased from 34.3% to 37.3%. Again, in contrast, while the percentage of uninsured adults in the non-targeted control group also increased significantly between 2008 and 2009, it remained constant in 2010.
  • Controlling for prior state reforms, ACA coverage rules are responsible for a 5.3 percentage point increase between 2009 and 2010 of non-spousal dependant coverage in targeted young adults.
  • A sensitivity test confirmed that the ACA increased non-spousal dependent coverage and reduced the uninsured rate among targeted young adults separate from any potentially confounding state coverage expansion effects. But the combination of state reforms and the ACA was particularly successful: The impact of the ACA on young adults who were targeted under prior state reforms as well (an increase of 8.7 percentage points in those using non-spousal dependant coverage) was about twice as large as the estimated impact in the population only eligible under the ACA (4.5 percentage points).

The researchers conclude that dependent coverage expansion in the ACA led to a quick and substantial increase in the share of young adults who use non-spousal dependent coverage and a reduction in their overall uninsured rate. Researchers state that this significant response “may have been encouraged by high public awareness of the ACA dependent coverage rules,” because “as early as April 2010, fully 70% of the public reported knowing about these rules.” They also surmise that the weak economy played a role, “by disproportionately limiting young adults’ access to coverage through their own jobs.”

“Benefits of this new reality to young adults and their families are clear, but this trend is not without costs,” the authors caution, citing issues such as likely increases in family premium costs and the possibility that businesses that hire young adults will be less inclined to offer full coverage plans. However, the authors ultimately conclude that in spite of potential future challenges, “the ACA young adult-dependent coverage expansion represents a rare public policy success in the effort to cover the uninsured.”

Tags: youth, consumer affairs, Obamacare