June 6, 2013 in Washington Post

by Ezra Klein

There’s been an interesting conversation over the last week about how young people will fare under health reform. Aaron Smith, executive director of Young Invincibles (and a bona fide young adult) has spent the past few years of his life worrying and working on exactly that question. So I asked him to weigh in. A lightly edited transcript of our conversation follows.

Ezra Klein: What have you guys learned about how young adults think about health insurance, both in the current system and in terms of Obamacare?Aaron Smith: I’d begin with the economic landscape because I think that matters here. The young adults we’re talking about are largely low income. They might be in school or in school part-time or in community college. They’re in and out of the workforce. They’re having a tough time landing a steady job with benefits. They don’t make very much money. Many of them were on their parents’ plan growing up. They don’t have a ton of familiarity with the health system. They don’t always know what terms like “deductible” and “co-pay” mean.

But they know they can get sick. More young people than folks over 75 go to the emergency room in a year. It happens frequently enough to them and their friends that they know the costs can be astronomical. Young women are more frequent users of health care; they need things like birth control and regular check-ups. You have young men who don’t have a primary doctor or even remember the last time they went to the doctor. About 15 percent of young adults have a chronic condition and know pretty well that they need health care.

How many of them are uninsured now?

About 19 million young adults 18 to 34 lack health insurance. Our polling shows that less than 5 percent of young people choose not to have it. The number one reason they don’t have it is the cost. Most young people don’t qualify for Medicaid right now even if they have very low incomes because most states just don’t give childless adults Medicaid. That’s one of the biggest changes under Obamacare. If every state expanded Medicaid, about 8 million would qualify for Medicaid. Another 9 million would qualify for subsidies because they make less than 400 percent of poverty.

So then 17 of the 19 million uninsured young people are, in theory, eligible for either subsidies or Medicaid under Obamacare?

That’s right. It’s a pretty phenomenal percentage. So if we do our jobs right, young people will be one of the biggest winners in the health-care law.

But behind this conversation lurks this larger question of whether young people care about health insurance at all. There’s a school of thought that says a lot of the young people who are uninsured or have very little insurance just don’t think they need health insurance. But, and this is anecdotal, that doesn’t fit with my experience very well. Young people I know are really nervous when they don’t have health insurance. They’re really excited if they get a job with benefits. I’m not saying I’ve got a perfectly representative sample, but I’m just not meeting many of these kids who literally don’t care about being insured. 

I heard this story on the radio the other day about a young person who said, “I didn’t really feel like I was an adult until I got a job with health insurance.” That’s definitely something I can relate to and that I’ve seen out there in the field. The term “young invincibles” is a health insurance industry term. It tries to explain the fact that young people are disproportionately uninsured. But I think people just dramatically underestimate how hard it is for someone who don’t get health insurance at their job to get health insurance. Less than 50 percent of young adults get employer-sponsored health insurance.

There have been some studies that looked at the choice of whether to accept coverage when you had an employer-based offer. Young people and older people made pretty much the same decisions. Older people were a bit higher, but both were above 70 percent. So when they have the option, the vast majority take it. But when you don’t have the option you have to make tough choices. It’s like deciding not to have a car or living in a bad area. It’s just a tough choice.

 But the cost does matter. So is Obamacare actually going to make insurance affordable for this group? Or will it make insurance more expensive for young, healthy people by making it easier for sicker, older people to buy insurance without getting discriminated against? 

The first important point is the huge percentage of unemployed young people who get access to either subsidies or Medicaid. So you saw in California that many young people will end up having insurance options that cost them less than $100 or less than $50 simply because their income is low enough to qualify for subsidies. For someone making $20,000 a year, they’re going to have to pay $40 a month for health insurance. That’s a very good deal. And in a state like California, there are also millions of young people who qualify for Medicaid.

Now we’ve identified a population between 300 percent and 400 percent of the federal poverty level that’s going to have more problems. The subsidies aren’t that rich for them, and so whether to buy is a tougher question. They’ll have financial strain. They have financial strain now. That’s why they’re uninsured. If you’re just getting by, then $200 a month can be a lot. That’s where education can be key. It can still make good financial sense to be covered because there are real risks. But I think, in general, it will be a good enough deal to sign up. We saw that in Massachusetts where youth uninsurance dropped in half in the first year.

 Expand on that a bit. I recognize Massachusetts is a somewhat unusual state. But its health reforms were very similar to the national reforms. They should’ve had the same issues with rate shock and with bringing older and sicker people in. So what did we learn from them?

There were a couple of interesting things in Massachusetts. One is the Massachusetts exchange had what’s called the “young adult” plan. It’s higher deductibles. It’s a bit cheaper in terms of premiums. It’s similar in some ways to the catastrophic plan available under the health-care law. It’s the most popular plan for young adults in the exchange. So that’s one important point: Youth-tailored insurance options are important.

And just to be clear, the federal plan has something similar in this catastrophic plan mainly available to young people, right? 

Yes, so there’s a catastrophic plan as part of the health law. There’s not been that much analysis of it. But it’s specifically targeting that young adult population. It has a very high deductible — about $6,000. So it’s not generous coverage. But it meets all the other standards in terms of benefit caps and preventive coverage and no discrimination and so on. For many young people, that will be their cheapest option. Particularly above that 300 percent of poverty line. In California, that was costing about $130 to $150 a month.

What else did we see in Massachusetts? 

They also did big public outreach campaigns. They got the Boston Red Sox to do PSAs. They understood there had to be an attitude change and they were very proactive about trying to address it. The polls show health reform in Massachusetts is actually quite popular, even among young people who are now being forced to purchase coverage. And that’s another similarity. There’s a mandate. But it has exceptions. Not many people pay it in Massachusetts. If you’re low-income, it doesn’t apply to you. That’s true nationally, too. The mandate doesn’t apply to you if coverage is more than 8 percent of your income. What we saw in Massachusetts is that people are either exempt or they choose to pay for health insurance, Very few end up paying the mandate.

The last point which has been talked about so much people don’t think about it anymore is the expansion of dependent coverage which has also been very popular. Nationally about three million people are estimated to have gotten back on their parents plan because of the law.

 So given all the issues of implementation and the political opposition to the law and the difficulties in various states and the early information about premiums, where do you think this will end up in 2014 and 2015? Do you think young people will sign up or stay away?

I’m pretty hopeful, in part because the experience in Massachusetts showed this model can work. But it will play out differently in different states. A state like California is following the playbook. They’ll do a big promotional campaign. They’re investing in on-the-ground outreach and education. They’re expanding Medicaid so really low-income folks will qualify for health insurance. So I could see it being a huge success in a state like that. But not every state will do that. An important point for young people is that some of the states with the highest rates of youth uninsurance are in the south and some of those states aren’t expanding Medicaid or building their own exchanges. My fear is what happens in those states. So I could see some states coming out and looking much better than other states.