We all know it. Health care reform was a BFD. Because of the passage of the Patient Protection and Affordable Care Act (ACA), up to 27 million of the currently uninsured in America could get covered.1 By the way, about 19 million of the uninsured are young Americans ages 18 to 34.2
But what does reform mean for young Americans? Here are the most important points:
Expands Affordable Coverage to Millions of Young Adults:
The new law provides coverage to millions of uninsured and underinsured young adults.
- First, the law gives states the option of expanding Medicaid, a very low-cost government insurance program, to cover individuals making under about $15,500 a year.3 Almost 8 million uninsured young adults age 18 to 34 could benefit from this affordable insurance option.4
- Second, the law creates tax credits for those purchasing insurance who earn under about $46,000 a year.5 Roughly 9 million uninsured young people ages 18 to 34 fall in this category and could receive tax credits.6 The tax credits will limit the amount an individual pays in insurance premiums for a plan purchased on the new health insurance marketplaces. For example, a young person who wants to buy a plan on the individual market (i.e. not through an employer) and is making $22,000 will have to pay no more than 5.9% of his or her income (or $1,300 yearly in premiums).7 The tax credits will cover any premium costs beyond that. These benefits started in 2014 and will assist even the currently insured by making coverage more affordable.
- Third, the law allows adult children to stay on their parent’s health plan to age 26. The National Center for Health Statistics estimates that 3.1 million previously uninsured young people have already gained coverage thanks to this provision.8 Many more are able to upgrade their currently inadequate coverage to the improved benefits offered by their parent’s coverage. This provision also adds nothing to state or federal deficits. Go to health.younginvincibles.org for more information.
The law will help to end the worst abuses of the insurance industry. It prevents insurance companies from:
- Denying people coverage based on a pre-existing condition.
- Raising rates after people get sick.
- Canceling an existing policy to avoid paying claims (“Rescission”).
Additionally, all plans will have to spend at least 80 percent (for small/individual plans) or 85 percent (for large group plans) of premiums on medical services. Those who fail to do so will have to submit rebates to consumers. That means more of your money will be required by law to go to the care you need.
Make It Easier to Find and Buy Insurance:
Just like you easily compare products and find good deals online, the new law seeks to make insurance easier to compare and buy plans by creating online marketplaces. There is a new, online health insurance marketplace where individuals and small businesses can go to compare plans and purchase the package that works best for them. This new competition should help to reduce prices and improve the quality of insurance plans. Also, an individual market plan gives young adults greater opportunity and freedom because it makes it possible to find the best job without the fear of going uninsured.
Health reform also seeks to reduce health care costs overall by requiring people to take responsibility for purchasing insurance or pay a penalty, a provision that started in 2014. By encouraging more people to buy in, the individual mandate reduces insurance premiums by spreading risk over a wider population. The provision also makes sense as a matter of personally responsibility; those who don’t purchase insurance end up visiting emergency rooms without the ability to afford care, pushing the cost of their treatment on everyone else.
Why Health Care Reform is Still Important:
The new law will not cover every young adult or ensure that all covered young people receive quality insurance. Many young adults will end up with so-called catastrophic plans that offer minimal benefits before enrollees must pay a deductible of more than $6,000. In states that decide not to expand Medicaid, individuals making less than the poverty level – under about $11,670 a year9 – could be left without an affordable option for coverage (although they will not have to pay a penalty for being uninsured). And undocumented young adults will not be able to purchase coverage on the new marketplaces – at full cost or with tax credits (they will also be exempt from the penalty). So there’s more work to do to ensure that every young American and every American has quality, affordable health coverage.
1. Effects of the Affordable Care Act on Health Insurance Coverage—February 2013 Baseline (Washington, DC: Congressional Budget Office (CBO), 2013), accessed August 19, 2013, http://www.cbo.gov/publication/43900.
2. Data derived from: “Current Population Survey (CPS) Table Creator,” U.S. Census Bureau, accessed August 19, 2013, http://www.census.gov/cps/data/cpstablecreator.html.
3. One hundred and thirty-three percent of the Federal Poverty Level (FPL) for an individual. “2014 Poverty Guidelines,” Center for Medicaid and CHIP Services (CMCS), accessed February 11, 2014, http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Downloads/2014-Federal-Poverty-level-charts.pdf.
4. Data derived from: “CPS Table Creator,” U.S. Census Bureau, accessed August 19, 2013, http://www.census.gov/cps/data/cpstablecreator.html.
5. Four hundred percent of the FPL for an individual. “2014 Poverty Guidelines,” CMCS, accessed February 11, 2014, http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Downloads/2014-Federal-Poverty-level-charts.pdf.
6. Data derived from: “CPS Table Creator,” U.S. Census Bureau, accessed August 19, 2013, http://www.census.gov/cps/data/cpstablecreator.html.
7. Estimate is for an individual (i.e. self-only, not family) plan for a 28-year-old non-smoker. Data derived from: “Subsidy Calculator: Premium Assistance for Coverage in Exchanges,” The Henry J. Kaiser Family Foundation (KFF), accessed February 11, 2014, http://kff.org/interactive/subsidy-calculator/.
8. Benjamin D. Sommers, Assistant Secretary for Planning and Evaluation (ASPE), Number of Young Adults Gaining Insurance Due to the Affordable Care Act Now Tops 3 Million (Washington, DC: U.S. Department of Health and Human Services (HHS), 2012), accessed August 19, 2013, http://aspe.hhs.gov/aspe/gaininginsurance/rb.shtml.
9. “2014 Poverty Guidelines,” CMCS, accessed February 11, 2014, http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Downloads/2014-Federal-Poverty-level-charts.pdf.