THE COMMONWEALTH FUND Rite of Passage Young Adults

THE COMMONWEALTH FUND Rite of Passage: Young Adults and the Affordable Care Act of 2010 Sara R. Collins, Ph. D. Vice President, Affordable Health Insurance Jennifer L. Nicholson, M. P. H. Associate Program Officer The Commonwealth Fund The Alliance for Health Reform and The Commonwealth Fund The New Health Reform Law and Young Adults Briefing May 24, 2010

Exhibit 1. Young Adults and the Affordable Care Act • • 13. 7 million 19 -29 year olds were without health insurance in 2008, about 30 percent of uninsured people under age 65. The Commonwealth Fund Survey of Young Adults found that 76% of uninsured young adults did not get needed health care because of cost. 46% of uninsured young adults with a chronic health problem reported that their condition had worsened in last 12 months as a result of not getting care soon enough. An estimated 11. 3 million young adults, both insured and uninsured, reported on that they were paying off medical debt over time. Of those 50 percent had asked family members for financial help, 31 percent delayed education or career plans, and 39 percent were unable to meet other debt obligations like school loans. Gaps in health insurance coverage among young adults are linked to critical transition points in young adults’ lives: – Aging off parents’ plans at high school or college graduation – Losing eligibility for Medicaid and CHIP at age 19. The Affordable Care Act will bring sweeping change to the health insurance coverage of young adults over the next few years by insuring millions, eliminating coverage gaps at key transition points, and protecting young adults and their families from high out of pocket costs and medical debt. Source: SR Collins and JL Nicholson, Rite of Passage: Young Adults and the Affordable Care Act of 2010, (New York: The Commonwealth Fund, May 2010). THE COMMONWEALTH FUND

Exhibit 2. Affordable Care Act: Provisions Benefitting Young Adults • Young adults on parent’s plans to 26 (September) • Prohibitions against lifetime benefit caps & rescissions (September) • Public reporting by insurers on share of premiums spent on non-medical costs • Coverage and no cost-sharing for preventive care in Medicare and private plans • Insurers must spend at • Medicaid expanded to 133% of poverty least 85% of premiums (large group) or 80% • Insurance market reforms (small group/individual) including no rating on on medical costs or health provide rebates to • State insurance exchanges enrollees • Essential benefit standard • Premium and cost sharing credits for exchange plans • Premium increases a criteria for carrier exchange participation • Individual requirement to have insurance • Employer shared responsibility penalties Source: SR Collins and JL Nicholson, Rite of Passage: Young Adults and the Affordable Care Act of 2010, (New York: The Commonwealth Fund, May 2010). THE COMMONWEALTH FUND

Exhibit 3. Young Adults On Parents’ Policies to Age 26: Federal Estimates of Take-up and Effect on Premiums, 2011 Low Estimate Mid-range Estimate High Estimate Young Adults Newly Enrolled on Parents’ Plans (millions) 0. 68 1. 24 2. 12 Previously Uninsured (millions) 0. 19 0. 65 1. 64 Incremental Premium Cost per Young Adult $3, 670 $3, 380 $3, 220 0. 5% 0. 7% 1. 2% Increase in Group Family Insurance Premiums THE COMMONWEALTH Source: US Department of the Treasury, US Department of Labor, US Department of Health and Human Services, FUND Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 under the Patient Protection and Affordable Care Act,

Exhibit 4. Three-Quarters of Young Adults Who Had Insurance Through Their Parent’s Employer While in College Lost or Had to Switch Insurance After College What happened to health insurance when graduated from or left college Don’t know/ refused 1% Continued to get insurance through same source 23% Switched to a new source 43% Did not have insurance 2% Lost insurance 32% Length of time without insurance* 2 years or more 23% Don’t know/ refused 1% <1 month 14% 1 year to <2 years 14% 6 months to <1 year 15% >1 month to <6 months 33% * Among those who had a gap between losing and gaining new insurance, or who went without insurance after graduating from or leaving college, or who did not have insurance when they graduated from or left college. Note: Numbers may not sum to 100% because of rounding. Source: SR Collins and JL Nicholson, Rite of Passage: Young Adults and the Affordable Care Act of 2010, (New York: The Commonwealth Fund, May 2010). THE COMMONWEALTH FUND

Exhibit 5. Distribution of 13. 7 Million Uninsured Young Adults by Federal Poverty Level in 2008 and Provisions in Affordable Care Act Uninsured young adults ages 19– 29 Percent Number Uninsured Premium Subsidy Cap as Share of Income Cost-Sharing Cap as Share of Medical Costs <133% FPL 52% 7, 139, 948 Medicaid 133%– 149% FPL 7% 908, 520 3. 0%– 4. 0% 6% 150%– 199% FPL 13% 1, 726, 171 4. 0%– 6. 3% 13% 200%– 249% FPL 9% 1, 270, 858 6. 3%– 8. 05% 27% 250%– 299% FPL 5% 740, 081 8. 05%– 9. 5% 300%– 399% FPL 7% 912, 303 9. 5% 30% Subtotal (133%-400%FPL) 41% 5, 557, 933 3. 0%– 9. 5% 6%– 30% >400% FPL 7% 973, 338 -- -- 100% 13, 671, 219 -- -- Federal Poverty Level Total Source: SR Collins and JL Nicholson, Rite of Passage: Young Adults and the Affordable Care Act of 2010, (New York: The Commonwealth Fund, May 2010). THE COMMONWEALTH FUND

Exhibit 6. Estimated Annual Premium Paid Out-of-Pocket Net of Subsidies for Coverage Purchased in Insurance Exchanges * Annual premium amount paid out-of-pocket by 25 year old plus premium subsidy 150% FPL Subsidy 200% FPL Subsidy 300% FPL 400% FPL 500% FPL Full Premium = $2, 637 Age 25 * For an individual in a medium-cost area in 2009. Premium estimates are based on an actuarial value of 0. 70. Actuarial value is the average percent of medical costs covered by a health plan. FPL refers to federal poverty level. Kaiser Family THE COMMONWEALTH Foundation Health Reform Subsidy Calculator–http: //healthreform. kff. org/Subsidycalculator. aspx. . FUND Source: SR Collins and JL Nicholson, Rite of Passage: Young Adults and the Affordable Care Act of 2010, (New York: The Commonwealth Fund, May 2010).

Exhibit 7. Support for a Requirement for Everyone to Have Health Insurance Percent of young adults ages 19– 29 who strongly or somewhat favor a proposal that requires everyone to have health insurance 73 62 62* 47* * Difference is significant at p<. 05, compared with “Democrat. ” Note: Numbers may not sum to totals because of rounding. Source: SR Collins and JL Nicholson, Rite of Passage: Young Adults and the Affordable Care Act of 2010, (New York: The Commonwealth Fund, May 2010). THE COMMONWEALTH FUND

Acknowledgements Karen Davis, President Jennifer Nicholson, Associate Program Officer www. commonwealthfund. org Cathy Schoen, Senior Vice President, Research and Evaluation Sheila Rustgi, Program Associate THE COMMONWEALTH FUND