Health Reform: Let's Lower—Not Raise—Young Adults' Premiums

Making young people buy expensive comprehensive health insurance is not the best way to proceed.

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People under age 36 form the dominant component of America's 45 million uninsured. Among them, the ages most lacking in health insurance are those in their 20s. You and I know them: They are just out of school, in entry-level or part-time jobs, or between jobs. They are usually blessed with good health, however much they may take it for granted. And they are relatively inexpensive healthwise, compared with those over 60 (by a factor of five or more), because they are spared age-related chronic diseases that consume most of the healthcare dollar, like atherosclerosis clogging arteries of the heart and other organs, degenerating bones and brains, and the vast majority of cancers. Young people have less expensive needs: preventive and primary care and assurance that they will be covered if they do encounter that infrequent, costly, unexpected catastrophic health event.

Under current health reform proposals in Congress, this group will be forced to buy health insurance—at prices that will be vastly inflated over the ones now available to them. That's because they will be obliged to buy the same basic comprehensive, federally chosen benefits package that older people would buy and pay premiums that cannot be less than half of the highest premium the pre-Medicare person owes. The higher premiums borne by the young, which would be $4,000 or more (policies can be found now for as little as $500 or $600 yearly) are intended to contribute to the health coverage of their elders. But they would force many young people, even those currently insured, to take government subsidies.

The twentysomethings are a unique subset of the uninsured. Consider five facts about them, gleaned from an August analysis by the Commonwealth Fund and other reports, that should bear on the design of their health insurance options:

1. Some 30 percent of those between 19 and 29 years of age, or 13.2 million young people, lacked health insurance during 2007. This number has been amazingly steady over the past five years, ranging from 12.9 to 13.7 million. But most of these people are not hard-core uninsured; they lack coverage for less than a year.

2. Unlike women, who regularly seek gynecological care, young men are known for having little or no use for the health system, and thus stand out, with 1 in 3 being uninsured. When either group needs high-cost care, it is usually for a rare and unexpected event, which explains why they are resistant to taking on expensive comprehensive health insurance.

3. Lack of insurance among these young people tracks life events, particularly graduation from high school or college. College grads fare little better than those who don't go to college as far as lacking insurance during the first year after graduation.

4. Students at colleges and universities can get health insurance plans for between $500 and $2,400 a year. At public universities, comprehensive insurance averages $1,482. Such policies accept all students regardless of pre-existing conditions and cannot be canceled during a medical leave of absence from school. These premiums, several thousand dollars shy of the cost of proposed government-mandated health coverage, suggest the level of premiums that should be made available to young people in any new system.

5. Transition from school to work is a vulnerable time for young people whether they are 19 or 23, and this has led more than half of the states to extend the age that children can remain on their parents' policies to their mid 20s. National health reform legislation does this as well, perhaps recognizing the fact that roughly half of people in their 20s report poverty-level incomes. Many are getting their education part time while working or are in entry-level jobs or internships that pay measly sums, making them dependents of sorts.

Young, not-quite-so-independent adults are on every parent's and surely every politician's wish list to achieve universal insurance coverage. But making them buy expensive, one-size-fits-all coverage would almost certainly call for extensive taxpayer subsidies. There is an alternative that would make it possible for this unique group, and for parents who often chip in, to manage health coverage on their own: Create a robust, competitive, national private insurance exchange with policies tailored to their needs and finances. They would pay premiums that match their lower risk for disease, as they now do for life insurance. Even with no denials for pre-existing conditions and no ability to cancel, insurers from across the country would compete for these millions of mostly healthy and prized new customers. The effect would be to lower, not raise, the cost of insurance the average twentysomething would pay. Yes, subsidies would be provided to the truly indigent, but far fewer young people would need government handouts than will be the case under the current plan.