Thursday, August 21, 2008

Oh, to be young and insured

Cost of new mandate to extend coverage remains in dispute
By Bruce Japsen | Chicago Tribune reporter
August 21, 2008
Sitting at a Deerfield sandwich shop Wednesday, a group of friends, all recent college graduates, discussed a worry many in their demographic share: no health insurance.
Zachary Herrmann, 24, is uninsured for the summer until he starts teaching at Evanston Township High School, while Miles Schermerhorn, 22, said his sister, not wanting to press her luck, recently spent several days at home waiting for insurance through graduate school to kick in.
"It definitely was nerve-racking to my parents because, God forbid, something catastrophic happens and you're uninsured," said Herrmann, who graduated last year from Stanford University with a master's degree in education.
Young adults 19 to 29 represent the fastest-growing segment of the uninsured in the U.S.; they lack coverage at a rate twice as high as that of adults 30 to 64. Some choose to gamble and go without, figuring they are young and healthy, while others struggle to pay premiums or work jobs just for the benefits.
The good news is that when it comes to reducing the ranks of the uninsured, young adults may be an easy group to tackle. The reason, in insurance industry parlance, is the risk pool. Some experts say that because young people generally are healthier, they tend to bring in more money than insurers pay out in health costs.
A new law pushed through by Gov. Rod Blagojevich this week and set to take effect Jan. 1, which will require insurers in Illinois to let young adults stay on their parents' policies until 26, reflects a growing trend among states and big business. These moves to bring more young people under protection cost money, but they won't be a huge factor in contributing to rising health-care costs, say actuarial analysts at some of the world's biggest health benefits consulting firms.
"Clearly, a bigger risk pool is always better," said Todd Swim, a worldwide partner with the Chicago office of Mercer, an employee benefits consulting firm. "The cost of the average person in this age category is very low."
Support for the idea crosses party lines and has been implemented or soon will be in more than 20 states, generally requiring coverage through 24 or 25. In New Jersey, the state requires coverage through 30.
In Illinois, some insurers removed young adults from family policies at 21 or upon college graduation, though some companies have moved up the age limit.
"We are seeing a lot of employers considering moving to 25 if their children are full-time students," Swim said.
The Illinois law, which some business groups want to challenge, would allow young adults to stay on their parents' policy until 26 regardless of where they live or what they are doing.
The law won't apply to all insurance plans because many large employers self-fund their plans and answer to the federal government, not the state.
In the latest U.S. census report on the number of uninsured adults, there were 8.3 million people 18 to 24 out of nearly 47 million Americans who had no medical coverage in 2006.

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