After the signing of the health care reform bill David Leonhardt of the New York Times called the move the, “federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago.” While he is right in “nearly every major aspect of the health bill” (now law) does push toward economic equity– one key area where this is far from the case is the popular provision that allows children to stay on their parent’s plan till the age of 26.
The provision in the law enables children to claim dependent status under their parents’ health insurance till the age of 26. The major reason this provision is in the bill is purely political. Probably one of the most popular and least controversial ideas, it is a reform that goes into effect immediately. Voters able to participate will immediately see the benefits of their children being covered. There are two schools of thought regarding the implications of this provision.
President Barack Obama and Democratic leadership will tell you the story of children graduating from college only to find no insurance available because of the poor economy and difficulty finding a job. There is security in knowing that these recent college graduates can stay on their parents’ plans and are able to get their feet on the ground. Most importantly they are covered in case of an emergency.
However, the long term implications of the policy and the impact it will have on low income populations is of great concern. The population that is most effected by this are upper income and upper-middle income families. These are the populations that are most likely to have health insurance offered by their employer, health insurance with dependent coverage, and parents that are able to pay the additional cost of dependent coverage.
The fear comes in the assumption that this is a majority of the population.
Of concern, coverage in the university setting is threatened if college administrators begin to assume college students will opt for parent coverage. While it is true that many plans currently cover children still enrolled in college, the additional burden of proving college enrollment and the low cost of the college plans often draw many away from the parent coverage and on to university plans. College plans are very low cost due to the fact the insurance pool is made up of largely young, healthy individuals. As more college students go to their parents’ plans this may raise the costs for older enrolled students.
The impact this provision will have on employer benefits is also of concern. If employers begin to assume young people will be covered by their parents we face a situation where employer sponsored coverage is further threatened. For large employers, the desire to bring young, healthy individuals into the insurance pool and keep costs lower will out way the desire not to cover young people, but professions geared at young adults and smaller businesses may opt not to cover. Because of other provisions in the health care reform bill, young adults have more options of purchasing insurance coverage, however, employer sponsored coverage is preferable under our current health care system.
Most importantly, as mentioned, these provisions benefit upper income individuals and neglect assisting lower income individuals– further creating social inequities. While there is no doubt that the health care reform law has moved our country in a direction of social equity, voters today will not accept a purely social justice bill. The dependent coverage provision is designed to provide middle to upper income voters with the security of knowing their own children are protected, potentially at the detriment of less advantaged young people.
update (3-28-10 2:30pm): Read this article in the Washington Post about this issue.