Dependent Coverage Eligibility and the Health Insurance Status of Young Adults
The federal requirement reduced the uninsurance rate of eligible young adults by 3.5 percent, [thereby] ... expanding the set of insured individuals by roughly 716,000.
The 2010 federal health reform -- the Patient Protection and Affordable Care Act -- required that with the first plan renewal on or after September 2010, all private health insurance plans treat children up to the age of 26 as dependents, eligible to be covered under a parent's family plan. A number of states had already enacted similar legislation that applied to some health insurance plans, but such laws did not cover the large employer plans operated under the Employee Retirement Income Security Act (ERISA) -- those plans cover a substantial fraction of the privately insured people in the United States.
In The Role of Federal and State Dependent Coverage Eligibility Policies on the Health Insurance Status of Young Adults (NBER Working Paper 18254), Joel Cantor, Alan Monheit, Derek DeLia, and Kristen Lloyd use data from the Current Population Survey to compare changes in the fraction of insured adults under the age of 26 with changes in the fraction of insured among those aged 27-30. They make this comparison both before and after dependent coverage eligibility took effect, and they find that the federal requirement increased the share of individuals covered by non-spousal dependent coverage by 5.3 percentage points. Similarly, the federal requirement reduced the uninsurance rate of eligible young adults by 3.5 percentage points. This translates into expanding the set of insured individuals by roughly 716,000 in just the first several months of implementation of this provision of the Affordable Care Act.
The authors also considered the joint impact of the federal reform and previously implemented state laws that expanded dependent coverage. They find that young adults targeted by both laws experienced an 8.7 percentage point increase in non-spousal dependent coverage and an 8.3 percentage point decline in un-insurance as compared to the smaller impacts seen among young adults eligible only under the federal reform.
This research reflects changes in coverage over just the first few months of implementation of the new policy. The authors note that while the dependent coverage expansion led to a "rapid and large reduction in the number of uninsured young adults," the additional enrollment may lead to future increases in family premiums. They also speculate on other potential effects of the legislation, including the possibility that businesses that primarily employ young adults may "become less likely to offer coverage as fewer young workers seek their own health benefits."