Dispelling the Myth: House GOP Repeal Bill will Nearly Double Uninsurance for Young Adults

FOR IMMEDIATE RELEASE:
March 13, 2017
Contact: Sarah Schultz, Sarah.Schultz@YoungInvincibles.org, 202-734-6510

A new analysis from the nonpartisan Congressional Budget Office finds that House Republicans’ American Health Care Act (AHCA) would cause 24 million people to lose health care coverage over the next decade, including an estimated almost 6 million young adults.

House Republicans and others insist that the proposal would be good for young people, pointing to changes in age rating, reduction in benefit packages, and the tax credit structure that decreases premiums for some young people. But the CBO’s analysis shows that the overall impact of the plan results in loss of coverage and quality options for young people. These coverage losses will be driven primarily by the impact of the AHCA on low-income young adults, as those who depend on Medicaid, means-tested tax credits, and cost-sharing subsidies will see their coverage options dissolve. Many of these individuals will also face the prospect of a new 30 percent continuous coverage surcharge, or “Millennial Penalty,” for realizing a gap in coverage.  The result of those changes is an increase in uninsurance among 19-29 year olds of more than 10 percentage points.

Millions of Young Adults will Lose Coverage

The ACA cut the young adult uninsurance rate nearly in half, whereas the CBO estimates that the AHCA would cause the young adult uninsurance rate to nearly double.

  • Uninsurance: According to our analysis of the CBO’s projections, under the AHCA, young adults age 19-29 would see an increase in the uninsured rate from about 12% currently to about 22%, resulting in an estimated 5.76 million more — or 11.6 million total — young adults without insurance by 2026.
  • Impact of Cutting Medicaid and Means-Based Tax Credits:
    • Medicaid: 3.8 million young people (age 18-34) have gained coverage through Medicaid expansion. If all states expanded Medicaid, 4.2 million more young adults could qualify for coverage and the Millennial uninsurance rate would drop to as low as 9.2 percent.
      • The AHCA effectively guts Medicaid, and the CBO projects this will result in a coverage reduction of 14 million people by 2026.  Millions of those left behind will be under the age of 30.
  • 12.3 million young adults age 19-29 have incomes that are at or below 150 percent of the Federal Poverty Line, so it is likely that millions of low-income young people would lose out not only on their Medicaid options, but would receive less generous tax credits, as the AHCA ends means-based tax credits.
    • The CBO similarly suggests that people living within this income bracket will not see their premiums go down.
    • The CBO states that changes in age rating, the flat tax credits adjusted only by age, and a reduction in the quality of plans available would bring premiums down for many moderate- and upper-income young people and increase the share of young people in the risk pool.  These changes, however, do not outweigh the coverage losses that young people see due to losses in Medicaid coverage and means-based tax credits for the lowest-income young people.
  • The Millennial Penalty: People who experience a gap in coverage for more than 63 days during the previous year will be charged a 30 percent premium surcharge for the next 12 months. Life changes that can cause brief disruptions in coverage disproportionately burden young adults, who are more likely to move, change jobs, or lack the resources to handle financial hardships that may lead to lapses in coverage.  The CBO similarly states that this penalty will make healthy consumers far less likely to enroll.
      • The CBO estimates that 2 million fewer people would purchase insurance in the years after 2018 as a result of the continuous coverage penalty.
      • *Coming this week: New YI analysis looks at the scale of how many young people could be subject to the Millennial Penalty — and how the figures compare to other age groups.
  • Defunding Planned Parenthood: Millions of young people rely on Planned Parenthood. The CBO estimates that low-income people living in areas without access to other clinics or practitioners serving low-income populations would be most impacted, and that 15 percent of this population would lose access to care.

Higher Out of Pocket Costs Create Barriers to Care

The CBO projects that much of the decrease in premium costs can be attributed to a decrease in the quality of coverage offered, in turn raising out-of-pocket costs for consumers, many of whom are low-income.  But young people have consistently chosen better plans when given the choice and the means. For example, the ACA offers a “catastrophic plan” option, primarily for those under 30 – but less than 1 percent of marketplace enrollees have chosen that option.  At the same time, young people have a negative 2 percent savings rate due to other financial constraints, making high deductibles and cost-sharing a significant barrier to care.

  • High Out-of-Pocket Costs:  Under the AHCA, there will be no requirements for insurance companies to sell plan options with higher actuarial values. The CBO estimates that most plans will drop to 60 percent actuarial value (equal to the current Bronze plan).
  • No Cost-Sharing Subsidies: The CBO estimates that AHCA plans with lower actuarial values will result in higher out-of-pocket costs than current ACA plans, especially once cost-sharing subsidies are eliminated in 2020 as proposed by the plan.
    • About 44 percent of young people earn below 250 FPL, the cut-off for cost-sharing subsidies under the ACA.
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