Impacts of Obamacare insurance coverage expansion for young adults

Charles Courtemanche 08 March 2015

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The Affordable Care Act of 2010 (ACA, better known as Obamacare) aims to achieve nearly universal health insurance coverage in the US through a multi-pronged approach featuring insurance market reforms, mandates, and subsidies. Most of the law’s coverage expansion components did not take effect until 2014, so there is not yet sufficient data to conduct detailed analyses of their effects on health-related outcomes. However, one important component of the law – a dependent coverage provision – took effect in 2010 and has already been the subject of considerable research. The dependent coverage provision required private insurers to allow dependents to remain on parents’ insurance plans until the age of 26. Some states enacted related laws prior to Obamacare, but they generally applied to only some young adults, such as those who were unmarried, full-time students, or lived with their parents. Moreover, none of the prior state laws applied to self-funded benefit programmes, which excluded about half of those with employer-provided coverage. In contrast, the Care Act dependent coverage mandate applies to all young adults under age 26 and all private insurance plans.

Impact of the Obamacare dependent coverage provision

Substantial evidence already exists that the Affordable Care Act dependent coverage mandate increased insurance coverage among young adults. Cantor et al. (2012), Sommers and Kronick (2012), Sommers et al. (2013), and Akosa Antwi et al. (2013) find that the mandate increased the insurance coverage rates of young adults in the affected age range by about 3-5 percentage points. Evidence is mixed as to whether these coverage gains have translated to increases in health care utilisation. Akosa Antwi et al. (2015) show that the Care dependent coverage provision increased young adults’ number of inpatient visits, especially for mental illness. Chua and Sommers (2014) find a reduction in out-of-pocket medical expenses but no evidence of changes in outpatient, primary care, hospital visits or prescription drug use.

In a recently published study, Silvia Barbaresco, Yanling Qi, and I aim to broaden the scope of the literature by examining the effect of the Obamacare dependent coverage provision on outcomes related to health care access, preventive care utilisation, health behaviours, and self-assessed health (Barbaresco et al. 2015). Our health care access variables are whether an individual has insurance coverage, a primary care doctor, and care needed but foregone because of cost. Preventive care measures include flu vaccinations, well-patient checkups, and pap tests. Our risky health behaviour outcomes relate to smoking, drinking, obesity, exercise, and pregnancy. The self-assessed health variables reflect overall, physical, and mental health as well as functional limitations. We examine data on over 120,000 young adults from the Centre for Disease Control and Prevention’s Behavioural Risk Factor Surveillance System. Our research design involves comparing changes in the outcomes among young adults just under the age cut-off for the dependent coverage mandate (23-25 years old) to changes among those just over the cut-off (27-29 years old).

Our main results suggest that the Obamacare dependent coverage provision improved young adults’ health care access, did not influence preventive care utilisation, had mixed effects on health behaviours, and improved some but not all dimensions of self-assessed health. Regarding access, we document clear gains in health insurance coverage and the probability of having a primary care doctor, along with some evidence of a reduction in the probability of foregoing care because of cost. In the preventive care category, we do not observe any conclusive evidence of effects on flu shots, checkups, or pap tests. We find that the mandate reduced young adults’ height-adjusted body weight but increased risky drinking while not affecting the other health behaviours. Regarding self-assessed health, we find evidence of an increase in the probability of respondents reporting excellent overall health, but no evidence of effects on days not being in good physical or mental health or the probability of having functional limitations. In other words, the improvements in health appear to occur at the high end of the distribution, with young adults who were already in very good health transitioning to excellent health as opposed to young adults with significant health problems overcoming those problems.

We also conduct analyses for demographic subgroups and find that the Obamacare dependent coverage mandate led to more substantial gains in health-related outcomes for men than women. Not only was the increase in health insurance coverage greater for men, but only men experienced clear improvements in any outcomes beyond health insurance. We suspect that these results are due to the fact that among young adults prior to the Care Act, women were more likely than men to be insured and to pay out-of-pocket for necessary health care services if they were uninsured.

The dependent coverage provision also led to greater gains for young adults with a college degree than those with less education. Although both groups experienced similarly large coverage expansions, only college graduates experienced clear improvements in any other outcomes besides insurance. In other words, college graduates appear to respond more strongly than others to obtaining insurance. One possible explanation is that young adults from high socioeconomic status families are the most familiar with the health care system and therefore the most likely to initiate care upon obtaining coverage.

Conclusion

Our results can be interpreted as suggesting either that the glass is half empty or half full. On one hand, obtaining health insurance coverage clearly leads to fewer improvements in health-related outcomes among young adults than other age groups. For instance, both Medicaid expansions and Massachusetts’ universal coverage initiative of 2006 have been shown to improve all of the self-assessed health variables included in our study and also to increase utilisation of at least some preventive services (Courtemanche and Zapata 2014, Finkelstein et al. 2012, Kolstad and Kowalski 2012, Van der Wees et al. 2013). On the other hand, it is encouraging that we do still observe some improvements in important outcomes for young adults. Given the generally good baseline health of this age group, one might have initially wondered whether coverage expansions for young adults would have any effects at all.

Finally, it is important to note what our results do not show. Even if one judges our estimated improvements in health-related outcomes to be underwhelming, the primary purpose of insurance is not necessarily to improve health, but rather to reduce financial risk. The benefits from risk reduction may be particularly high for young adults given their relatively limited ability to draw on accumulated wealth to pay large medical bills from major illnesses or injuries. Additionally, effects of Obamacare on young adults should not be evaluated in isolation. Expanding coverage among young, healthy individuals is important to offset the upward pressure on premiums from the coverage expansions among older and sicker individuals. The Affordable Care Act consists of a number of different components designed to work synergistically, and they need to be evaluated together as further evidence accumulates over the next several years. 

References

Akosa A Y, A S Moriya, and K Simon (2013), “Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act Dependent Coverage Mandate”, American Economic Journal: Economic Policy, 5, 1-28.

Akosa A Y, A S Moriya, and K Simon (2015), “Access to Health Insurance and the Use of Impatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate”, Journal of Health Economics, 39, 171-187.

Barbaresco, S, C Courtemanche, and Y Qi (2015), “Impacts of the Affordable Care Act Dependent Coverage Provision on Health-Related Outcomes of Young Adults”, Journal of Health Economics, 40, 54-68.

Cantor, J C, A C Monheit, D DeLia, and K Lloyd (2012), “Early Impact of the Affordable Care Act on Health Insurance Coverage of Young Adults”, Health Services Research, 47, 1773-1790.

Chua, K P and B D Sommers(2014), “Changes in Health and Medical Spending among Young Adults under Health Reform”, Journal of the American Medical Association, 311, 2437-2439.

Courtemanche, C and D Zapata (2014), “Does Universal Coverage Improve Health? The Massachusetts Experience”, Journal of Policy Analysis and Management, 33, 36-69.

Finkelstein, A N, S Taubman, B Wright, M Bernstein, J Gruber, J P Newhouse, H Allen, K Baicker, and The Oregon Health Study Group. (2012), “The Oregon Health Insurance Experiment: Evidence from the First Year”, Quarterly Journal of Economics, 127, 1057-1106.

Kolstad, J T and A E Kowalski (2012), “The Impact of Health Care Reform on Hospital and Preventive Care: Evidence from Massachusetts”, Journal of Public Economics, 96, 909-929.

Sommers, B D, T Buchmueller, S L Decker, C Carey, and R Kronick (2013), “The Affordable Care Act Has Led to Significant Gains in Health Insurance and Access to Care for Young Adults”, Health Affairs, 32, 165-174.

Sommers, B D, and R Kronick (2012), “The Affordable Care Act and Insurance Coverage for Young Adults”, Journal of the American Medical Association, 307 (9): 913–4.

Van der Wees, P J, A M Zaslavsky, and J Z Ayanian (2013), “Improvements in Health Status after Massachusetts Health Care Reform”, Milbank Quarterly, 91, 663-689.

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Topics:  Health economics

Tags:  Obamacare, health insurance, health behaviour

Assistant Professor of Economics in the Andrew Young School of Policy Studies, Georgia State University

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