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Mind The Gap: The Future of Healthcare in America

Opinion | November 15, 2009

As Tufts students prepare for graduation, they have a lot of things on their minds. Most of the time, they’re not overly concerned that they could become uninsured unexpectedly. However, more and more young adults are slipping through the cracks of this country’s health care system as they try to find their footing in the midst of transition. Young adults get overlooked as they outgrow the coverage they had as children and fail to receive sufficient coverage as new entrants to the labor force. This void in our health care system has attracted attention in the midst of the current health care reform debate. Ensuring that young adults get health insurance is important not just to the well being and safety of our segment of society, but also to the effectiveness of the health care system overall.

In 2008, the Urban Institute, a Washington-based think tank, evaluated the health insurance coverage of young adults, finding that 10.3 million young adults from ages 19 to 26 do not have health insurance. Young adults are overrepresented among the country’s uninsured, constituting 28% though they are only 18% of the overall population. These young adults do not fit into the categories of people to whom insurance is very accessible. They are no longer children, so those that have been covered as dependents on their parents’ employer policies often get dropped. Medicaid and the State Children’s Health Insurance Program define 19-year-olds as adults, and many young adults will not qualify under this classification. The risk is greater if the young adult will not attend college, in which case 60% of employers who previously offered coverage would not cover the young adult as a dependent. Full-time students are significantly less likely to be uninsured; they may be able to maintain their status as dependents or receive coverage from their university.

After graduation, most young adults don’t immediately shift into positions from which they would have access to coverage. Any hope of continuing as a dependent of their parents’ insurance is lost, and it could be a while before a graduate is hired by an employer who provides them with sufficient insurance. According to the Commonwealth Fund, many recent graduates are delayed in acquiring insurance because of periods of joblessness, temporary jobs, and employment at smaller institutions or in low-wage positions. It is likely that about 40% of college students will spend at least a brief period of time uninsured after graduating.

In addition to situational reasons, many young adults don’t prioritize having health insurance. They are often unwilling to pay the price of health insurance because of they find it unlikely that they will become ill or injured and take advantage of having insurance. Relative to other expenses, purchasing private health insurance does not seem worth it. The Urban Institute found that young adults from 19 to 26 are significantly less likely than those over 27 to purchase employer-sponsored insurance available to them, partially because of having lower incomes but also because of their evaluation of the necessity for health insurance. The Urban Institute found that only 48% of people surveyed between the ages of 19 to 26 strongly agreed that health insurance was necessary for them compared to 70% of those over 27. This attitude has earned this demographic the nickname “young invincibles” in the health care reform debate.

Of course, young adults are not invincible. Lacking health insurance puts them in a vulnerable position. Uninsured young adults are more likely to forgo necessary medical treatment or regular checkups. The New York Times reported in February about some of the desperate measures uninsured young adults have taken, including self-diagnosing using websites like WebMD and obtaining medical treatment from unaccredited sources. Michele Bowdler, Director of Health Services at Tufts, spoke with the Observer about the lasting consequences of being uninsured for even a brief period. “It’s a gamble,” Bowdler said, “there’s a gap in coverage. If you’re diagnosed with anything, then that qualifies as a preexisting condition. When you get a job—so you can be covered for depression, cancer, surgery—the preexisting condition clause says that when you come into the insurance pool with a preexisting condition, there will be limited coverage.” Young adults may feel that if they’re healthy now, insurance isn’t necessary, but their access to the system may be more difficult when they need it more.

Getting these “young invincibles” to purchase health insurance is crucial to health care reform. Their inclusion would balance out costs for other Americans, who are more likely to need the services provided by health care. Young adults are relatively low risk, but would make a valuable contribution toward funding the health care system as a whole. With reform legislation, young adults will no longer have a choice to forgo health insurance if they don’t feel that they need it. They also may end up paying more than they have been willing to in the past when insurance becomes mandatory. By being forced to pay into the system from which they take relatively less, young adults will effectively be paying for the health care of older Americans.

The Democrat-controlled House and Senate have each proposed solutions to overcome what consensus has deemed an embarrassingly inept system given the United States’ wealth and power. The House bill (known as America’s Affordable Health Choices Act of 2009) is a lightweight at 1,017 pages while its Senate counterpart, colloquially known as BaucusCare for the Montana senator who conceived it, is even bulkier.

Senator Baucus’ proposal, passed through the Finance Committee, includes the individual mandate that the other mainstream bills have, and caps insurance premiums at 13% of income. Like these other plans, this bill prohibits the denial of coverage based on pre-existing conditions, a condition that is important to young adults. Those dropped by their parents’ or university’s plan while suffering from diabetes, HIV, or any other condition that plagues 20-somethings, would no longer have to worry about being denied or priced out of new coverage.

This proposal, however, has its shortcomings. In an effort to get bipartisan support that failed to materialize, it forgoes the contentious public option, a government-run insurance plan that would compete against private plans to drive premiums down. Instead, Baucus has proposed independent co-ops that are intended to serve the same purpose as the Public Option but would lack the strong negotiating position of the government and would then be essentially toothless, all in an effort to appease conservatives resurrecting the Red Scare.

The Baucus bill would nominally provide insurance for the Millennial Generation, but a closer look at the plan it offers discredits its reformist aspirations. It offers young graduates the Catastrophic Plan for Young Individuals, originally called the catchier but misguided Young Invincibles Plan. With low monthly costs but high deductibles (up to $5,800), this plan only sounds appealing until you actually need care, after which point it can do nearly as much damage to your savings as going uninsured. This catastrophic plan presumes the health of young adults barring freak accidents and so it skimps on preventative care. Prescriptions, checkups, colon screenings and gynecological visits all get paid out of pocket. Catastrophic plans do not work; according to the Commonwealth Fund, a policy research center, nearly half of all adults subscribing to high deductible policies whose income is less than $50,000 reported delaying or avoiding medical care. Well over 80% of all young adults fit into this income bracket.

Another Senate bill, drafted by the more liberal Health, Education, Labor, and Pensions (HELP) Committee differs crucially in that it includes a public option and a mandate that employers must either provide insurance or face a penalty. The House bill contains similar provisions. In the weeks to come, Senate leaders will find a compromise between the Finance and HELP Committee’s bills, which will then have to be reconciled with the more liberal House bill.
While many aspects of health care reform legislation remain highly controversial and are in flux, one provision that will benefit recent graduates and young professionals will raise the age of dependency. Currently dependents are dropped from their parents’ policies sometime between turning 18 and ending full-time student status, depending on the state. All of the bills under consideration would allow young adults to remain on their parents’ policies until turning 26 or 27, giving them a chance to establish themselves in the workplace and start saving.

Massachusetts takes the lead…
Massachusetts passed health care reform in 2006 and, with just two percent of its populace uninsured, boasts the highest percentage of people covered in the nation (the national average is 15%). It is the only state whose aspirations to universal health care have been codified in law and thus is a model for the national plan. The commonwealth achieved this by mandating coverage for its residents and fining those who fail to comply while subsidizing insurance policies for those earning up to three times the federal poverty level. Under this legislation, employers must offer coverage or else pay a modest fee for employee, while Medicaid coverage was extended among the poorest members of society.

Many see the Massachusetts system as a model for national reform. The system is not perfect, however. The minimum standard of employer coverage sometimes proves inadequate, and the lowest-income workers are often unable to afford necessary care. Massachusetts benefitted from an easy transition to near-universal coverage because a framework was already in place that does not exist nationally, including already-strong regulation of the insurance industry and influential unions.

While the Massachusetts law has been successful in expanding the breadth of coverage, it has yet to succeed in an equally important aspect of reform, bringing down out-of-control costs. The insurance mandate—the requirement that all individuals get insurance or else face fines—must be crafted free of lobbyists’ influence so that people get the coverage they deserve at prices they can afford. It could easily be perverted into a profit grab where insurance companies extort money from people who can barely afford to pay but are required to by law.

Reform in name alone?
There is no doubt that any reform will be positive reform as long as it increases the availability of health insurance to young adults, thus giving them the freedom to pursue entry-level jobs in fields in which they are interested rather than seeking work merely for the benefits they provide. Raising the age of dependency will undoubtedly ease the burden faced by young graduates.

We wonder, though, how effective the plans offered to this generation will be. High-deductible catastrophic policies may serve just to enrich insurers without changing circumstances significantly for the young adults who are supposed to be their beneficiaries. At best, it is a misguided attempt by the proverbial old white men to help a younger generation, and at worst, a successful attempt by insurance industry lobbyists to reap even more profits by government mandate.
If President Obama and the Congress are serious in saying that reform should be more than in name alone, they should look to Massachusetts as a model for what can be accomplished. The commonwealth’s standard of “reasonably comprehensive” coverage, including prescriptions and outpatient services, will allow for recent graduates and other young adults to prevent health crises before they warrant an emergency room visit.