By: Aaron Smith
First it was, we think we are invincible. Then it was that the penalty was too low, or that we would be turned off by website glitches. After the Department of Health and Human Services released its initial age breakdown enrollment data Monday, it is time to finally put the pessimism to rest. Young people are enrolling in health care coverage under the Affordable Care Act, and for good reason — being covered is essential to their economic security.
On Monday, the Department of Health & Human Services announced that 30% of Obamacare’s 2.2 million private insurance enrollees are under the age of 35. More specifically 24% of enrollees are between the ages of 18- and 34-years-old. In other words, the exchanges have a percentage of young adult enrollees that is comparableto their proportion of the overall population. All the evidence suggests that youth enrollment will only go up as we get closer to the deadline.
We are ecstatic to see young people enrolling at such a fast clip this early on in the enrollment process — but we’re not surprised. Polls have consistently shown that this generation wants coverage. To give some context, the average income for an uninsured 25-year-old is about $17,800. In the post-ACA world, that same individual can get a silver plan for about $63 a month, with a reduced deductible, thanks to new tax credits and cost sharing subsidies. In fact, the vast majority of young adults will have plans available for under $100 a month. Those making below about $16,000 a year could even qualify for free coverage under Medicaid. These new options create a new day in health care for young people.
We are confident that young adult enrollment rates will continue to surge — as was the case in December — in the months ahead. A recent survey by the Commonwealth Fund found that 41% of federal and state health insurance marketplace visitors were between the ages of 19 and 34, suggesting that many young adults might still be checking out their options.
Moreover, we saw a similar enrollment pattern in Massachusetts with their health care reform law. According to the New England Journal of Medicine, enrollments among the non-chronically ill population — a younger population — increased over 175% before the Massachusetts mandate kicked in. This makes sense — those who have been discriminated against due to a medical condition were always expected to be first to gain coverage once the Marketplaces open. We anticipate seeing a similar surge in the rate of young adult enrollments ahead of March 31st deadline to get covered and avoid the penalty.
Outreach campaigns will also ramp up over the next couple of months, accelerating enrollment rates among the younger population. In addition, many young people are learning what a premium is or what a deductible is for the first time, which is why it will take them more time to select the plan that best suits their needs, and why educations campaigns are critical. This education process can take time but it works over the long run. In Massachusetts, for example, youth uninsurance rates dropped from 27% to 8% over several years as the word continued to spread.
The Affordable Care Act’s opponents will undoubtedly scrutinize the enrollment numbers of this population. Some have speculated that approximately 35% to 38% of Obamacare enrollees should be young for premiums to remain low in the insurance market. However, recent analysis by the Kaiser Family Foundation demonstrates that rates will remain stable even with far fewer young people enrolling. Moreover, this view does not take into account rate stabilizers built into the law if the enrolled population is slightly older.
To find such strong interest after having essentially only one month of enrollments to consider—given the website malfunctions in October and November—is a big deal.
So don’t buy the narrative that young people are not enrolling. The young uninsured know a good deal when they see one.