Young, Invincible — and the Key to Health Reform

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Tom Stewart / Corbis

There are plenty of reasons people go without health insurance, but no group has more cause than 20-somethings. These young adults are less likely to be offered employer-based coverage, earn less money to buy insurance on their own, are generally healthy and spend little time worrying about the worst-case scenarios that could befall them.

No wonder, then, that this age group has the highest uninsured rate of any cohort in the U.S. population: some 13 million Americans ages 19 to 29 — or 1 in 3 — lack coverage. That's a scary number, and not just because any of them could end up needing serious medical care for an unforeseen illness or accident. The willingness of young people to forgo insurance, it turns out, is a major problem for the entire health-care system, which needs them on the rolls to help spread out risk and keep older Americans' premiums from going even higher. Young adults, after all, are less likely than older generations to need health care, meaning insurance companies can charge them low premiums and, in most cases, sit back and collect without much risk of paying out for health-care services.

Lawmakers are well aware of this insurance generation gap, and as the Senate Finance Committee prepares to negotiate the final details of its health-care-reform bill, chairman Max Baucus has outlined a strategy to bring these Americans into the fold. A draft of the Finance Committee's bill calls for a new category of health insurance specifically designed for what it calls "young invincibles." These catastrophic policies — carrying low premiums and high deductibles of up to around $6,000 — would be sold alongside more comprehensive insurance in newly established "exchanges," or state-based marketplaces where Americans without access to affordable employer-based policies could compare and shop for coverage.

The young-invincibles policies would be limited to Americans age 25 years or younger and would include coverage for preventive care — with cost-sharing — and no annual limit on benefits. (Under the same legislation, some poor young adults would also be newly eligible to enroll in Medicaid, which up until now has been closed off to most young, childless, nondisabled adults, no matter how poor they are.)

A Finance Committee aide says the body has not yet determined how much these catastrophic policies might cost, but they would be lower than premiums for "bronze" policies, the standard minimum-benefit package that would be sold in the exchanges. (The Senate Health, Education, Labor and Pensions [HELP] Committee includes a provision in its draft bill that would allow Americans up to age 26 to be claimed as dependents on their parents' insurance policies — the HELP and Finance Committees' bills will have to be merged before a full vote for a Senate bill on the floor.)

While the Senate Finance Committee's bill would not allow insurers to annually cap benefits, many health-policy experts warn that the young-invincibles policies do not constitute full coverage. "If you're sick, you're not going to want this policy," says Linda Blumberg, a health-policy analyst at the Urban Institute. The only health services that would be covered before a young invincible reaches his deductible would be preventive care, which would be only partially paid for. A bronze policy, by contrast, would cover 65% of total health-care costs, while covering 100% of preventive care.

Although young adults are, as a group, healthier than older Americans, they are far from immune to sickness or health-care expenditures. An August report from the Commonwealth Fund stated that 15% of adults ages 18 to 29 suffer from arthritis, asthma, cancer, diabetes, heart disease or hypertension — and more than half are overweight. They also end up getting injured quite often — 24% of Americans ages 18 to 29 visited an emergency department in 2008, according to the fund.

Under the Baucus bill, all Americans — including young adults — who choose to forgo health insurance would be charged an excise tax of up to $950 per year, depending on income. But just because the penalty might be less than annual premiums for a policy doesn't mean young people would necessarily take the cheapest way out. "You are still paying $950 for nothing or you pay a little bit more for something," says a Finance Committee aide.

The best evidence that this isn't just wishful thinking lies in Massachusetts. The state enacted universal-health-insurance reforms in 2006, and sells private-insurance policies for young adults through its exchange, called the Connector, with annual deductibles of around $2,000 and annual payment caps of $50,000. These plans cost about $100 to $150 per month, depending on location and whether they include prescription-drug coverage. The penalty for young adults without insurance was $56 per month in 2008. In 2008, the uninsured rate among Massachusetts residents ages 19 to 25 was far below the national average, at around 8%, though that same group accounts for about one-third of state residents still without insurance.

Still, convincing a critical mass of young adults to sign up for health insurance may not just be a question of affordability. In a June 2008 survey by the Urban Institute, just under half of Americans ages 19 to 26 said they "strongly" agreed that health insurance is needed, compared with 70% among the entire population. In other words, the real challenge might be getting young invincibles to understand they're not actually invincible.