Coverage of the Young and Spending by the Old

By January 16, 2012 Commentary

Two articles from the Employee Benefit Research Institute examine whether the reform law has in fact led to a pickup in insurance coverage for young adults and looks at the impact of limited income on seniors’ health spending behavior.   (EBRI Report)   The reform law’s primary goal was to create universal insurance coverage, while hopefully controlling the cost of doing so.  One early part of the law was to require that insurers allow children of covered adults to stay on the insurance plan until age 26.  The early evidence collected by the authors from various surveys suggests that there has been an uptick in enrollment by  19-26 year-olds, which is also consistent with other research suggesting that adding these people has caused an increase in insurance premiums.  Ascertaining the effect is complicated, as a number of young adults lost jobs, and employment-related insurance, in the recession, and a number of those persons may have been added to parents’ plans.  So there is a safety-net effect of the provision, but how much it encouraged the adding of children who had not had coverage of their own is less clear.  Overall the authors conclude that the law has resulted in more dependent children having insurance.  The cost of doing this, however, may be a factor in discouraging some employers from offering coverage at all, or discouraging some parents from adding older children to their plans, if it means their cost-sharing goes up significantly.

At the other end of the age spectrum, for older Americans health expenses may force difficult choices regarding health care and other necessities.  The research finds that for households of adults over age 50 total spending from 2008 to 2009 stayed the same for 55%, decreased for 26% and increased for 19%.  Factors for decreased spending include reduced income, need to reduce debt, decrease in stock values, change in employment and dropping house values.  Reasons for increased spending were not always positive, including things like rising costs of food, drugs, gas, etc., as well as increased income or wealth.  About 28% of households said they had trouble paying their monthly bills and, almost equally among households with increasing or decreasing spending, steps were taken to save money that affected health care receipt, such as almost 22% of households saying they had changed drug purchases, whether going to a generic or just not filling the prescription, and 20% saying they had postponed or skipped doctor appointments.  Unfortunately these changed behaviors were almost twice as likely among persons with self-reported poor health as those who said they were in excellent health.

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