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How Much Would Losing Obamacare Cost Unemployed Young Adults?

June 14, 2012
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With the Supreme Court set to rule on the Affordable Care Act, the entire law could well be nullified if the individual mandate is ruled both unconstitutional and inseparable. With it would go a provision that allows young adults to stay on their parents’ health insurance plans until they turn 26, providing a safety net for the young and unemployed in an adverse hiring market.

How much would it cost young Americans to move from their parents’ employer-based plans to the individual market? By NerdWallet’s estimates, the nationwide cost difference between the average cost to add a dependent to an employer-based plan, and the average individual market premium for 18 to 24-year-olds, ranges from $539 to $773. But certain states and cohorts would pay far more, in one case facing $2,000 more in health care premiums on the individual market.

Employer-based plans cover the majority of Americans: 55% of the insured receive health care through work. What’s more, the employer covers on average 2/3 of the bill. For youth under 26, losing the Obamacare provision would deliver a triple blow. Adding a dependent to an employer-based family plan is relatively inexpensive, but purchasing single coverage and going through individual market both send costs spiraling. Out-of-work youths would also have to pay the premium themselves, rather than share the cost with an employer.

NerdWallet analyzed employer-based health premiums as well as premiums purchased on the individual market and found the cost differences to be significant, with the potential to price out-of-work youth out of the health insurance market.

Among the key findings:

  • Youth aged 18 to 24 nationwide would pay an average of $656 more on the individual market.
  • Women fared the worst: females in that cohort would pay $773 more.
  • Rhode Islanders would face the worst losses. Because of high premiums on the individual market, 18 to 24-year-olds as a whole would pay over $1,800 more than under Obamacare.
  • Rhode Island women were the worst off of any state and cohort, paying over $2,000 more.
  • 18 to 24-year-olds overall would pay more than $1,000 extra every year in:
    • Connecticut, Montana, Nevada, New Hampshire, Rhode Island and Virginia
  • Women of that age would pay more than $1,000 extra in those states, as well as:
    • Georgia, Oklahoma, Pennsylvania, South Carolina and Tennessee. 

Differences in individual market premiums largely drove the inter-state disparities: while the cost to the worker of adding a child may be slightly higher, residents of some states paid far more in individual market premiums.

Caveat: The study compares the average employee contribution to add a dependent and the average premium on the individual market for 18 to 24-year-olds. Certain plans (PPO’s, for example) would cost more than the average, while high-deductible plans would cost less. A 2009 study of individual market health savings account/high deductible plans found that 21% of enrollees were under 19, and an additional 11% were between 20 and 29. The cost to buy on the individual market is also highly dependent on age and gender; the ACA prohibits gender- or age-based pricing when adding a dependent.

Nationwide cost to 18 to 24-year-olds

Taken nationally, an 18 to 24-year-old would face an average premium of nearly $1,400 on the individual market, an increase of $656 from the additional cost to the family plan. Women faced disproportionate increases: from a premium of $722 on their parents’ plan, gender disparities and the individual market would push their premiums to nearly $1,500.

Market Age 18 to 24 Women Age 18 to 24 Men Age 18 to 24
Cost to Add to Parents’ $722 $722 $722
Average Individual Market Premium $1,378 $1,495 $1,261
Difference $656 $773 $539

Disproportionate effect on economically disadvantaged

The loss of the under-26 provision would have the most direct effect on unemployed, non-student young adults, who would not have access to insurance through traditional groups.

According to the Bureau of Labor Statistics, the overall unemployment rate in May 2012 stood at 8.2%. But unemployment was far more pervasive among youth:

  • 13% for 20-24-year-olds
  • 24% for 18- and 19-year-olds
  • 37% for African-Americans aged 16-19
  • 26% and 14% for men aged 18-19 and 20-24 respectively
  • 21% and 12% for women aged 18-19 and 20-24 respectively

Further, young adults face high underemployment rates holding part-time jobs that are less likely to offer health insurance:

  • 31.1% of high school graduates aged 17-20
  • 19.1% of college graduates aged 21-24

According to the White House, 6.6 million young adults who would otherwise have to face the individual market were able to join their parents’ plans under Obamacare. The loss of the provision would have a disproportionate impact on young women, who face higher premiums, and minorities, who are more likely to be unemployed.

Appendix A: Full results of premium analysis

Cost Increases to 18 to 24-year-olds by state

Premiums on both a parent’s plan and on the individual market vary greatly from state to state. While Florida, Texas and Missouri tended to have higher family premiums, Rhode Island had starkly higher individual premiums, charging nearly $2,500 for 18 to 24-year-olds on average. Because of these discrepancies, youth in some states would face far higher increases without the ACA.

State Cost to Add to Parents’ Plan Individual Market, Age 18 Difference
United States $722 $1,378 $656
Arizona $769 $1,536 $766
California $746 $1,526 $781
Colorado $702 $1,440 $739
Connecticut $742 $1,817 $1,075
Florida $909 $1,655 $746
Georgia $718 $1,674 $956
Illinois $672 $1,475 $803
Indiana $733 $1,520 $786
Iowa $718 $1,352 $634
Kansas $632 $1,356 $725
Minnesota $627 $1,545 $917
Missouri $796 $1,413 $617
Montana $580 $1,714 $1,134
Nebraska $747 $1,530 $783
Nevada $677 $1,699 $1,022
New Hampshire $778 $1,778 $1,000
North Carolina $718 $1,355 $637
Ohio $637 $1,413 $775
Oklahoma $721 $1,670 $950
Pennsylvania $584 $1,490 $906
Rhode Island $642 $2,479 $1,837
South Carolina $706 $1,662 $956
Tennessee $671 $1,634 $962
Texas $873 $1,664 $791
Virginia $581 $1,675 $1,093

Premium changes for 18 to 24-year-olds by gender

With the removal of ACA-mandated gender parity in premium pricing, women would pay significantly more on the individual market than on the employer-based market. Since adding a dependent costs the same no matter the dependent’s gender, women are protected from this increase under Obamacare. However, losing both family coverage and gender parity laws would significantly raise costs for women.

Rhode Island women fared the worst of any state and gender. They would pay over $2,000 more every year if they lost employer-based coverage through Obamacare.

State Cost to Add to Parents’ Plan Women Aged 18-24 Difference Men Aged 18-24 Difference
United States $722 $1,495 $773 $1,261 $539
Arizona $769 $1,666 $897 $1,405 $636
Connecticut $742 $1,971 $1,229 $1,663 $921
Florida $909 $1,796 $887 $1,515 $606
Georgia $718 $1,816 $1,098 $1,532 $814
Illinois $672 $1,600 $928 $1,349 $678
Indiana $733 $1,649 $915 $1,391 $657
Kansas $632 $1,472 $840 $1,241 $609
Missouri $796 $1,533 $737 $1,293 $497
Nebraska $747 $1,660 $913 $1,400 $654
Nevada $677 $1,843 $1,166 $1,555 $878
North Carolina $718 $1,470 $752 $1,240 $522
Ohio $637 $1,533 $895 $1,293 $656
Oklahoma $721 $1,812 $1,091 $1,528 $808
Pennsylvania $584 $1,617 $1,032 $1,364 $779
Rhode Island $642 $2,689 $2,048 $2,268 $1,627
South Carolina $706 $1,803 $1,097 $1,521 $814
Tennessee $671 $1,773 $1,101 $1,495 $824
Texas $873 $1,805 $932 $1,523 $650
Virginia $581 $1,817 $1,236 $1,533 $951

Appendix B: Methodology

All figures are in 2012 dollars.

Cost of adding to parents’ plan

To arrive at the cost of adding a dependent to his parents’ plan, we used 2010 state-level data on the average worker contribution to a family health care plan (the latest available) and 2011 nationwide data on the average family premium by number of members on the plan.

We then calculated the cost of adding a child to the family plan compared to the premium before adding that child. Based on state-level data on the average number of members on the family plan, we calculated what it would cost to increase the family size by one relative to the family’s premium. We then multiplied that ratio by the average family premium for that state.


Cost to 18 to 24-year-olds on the individual market

To separate distortions caused by the ACA, we used 2009 data for average premiums on the individual market. We used national-level data to index premiums for 18 to 24-year-olds relative to the average, then applied that ratio to state-level data of single individual market insurance premiums. Only states for which this data was available were included.

Cost to 18 to 24-year-old men and women

Again using 2009 national-level data, we calculated the average cost of 18 to 24-year-old men’s and women’s premiums relative to the average. We then applied that ratio to our estimated individual market premium for that age cohort. We excluded states with existing gender parity laws.


Appendix C: State-by-State Coverage Laws

Some states have additional regulations on how long insurers must cover dependent adult children. Many have additional conditions (financial dependency enrollment status marital status) that are prohibited by the ACA. Information is current as of June 2010 and data is taken from the National Conference of State Legislatures unless otherwise specified.

State Coverage Until Conditions
Alaska 23 No preconditions
California 22 Declared a financial dependent on federal income tax filings
Some policies (often small group) require that the child be a full-time student
Colorado 25 Unmarried and declared a financial dependent OR
Same permanent address as primary policyholder
Connecticut 26 Unmarried AND
Resident of Connecticut OR Full-time student
Delaware  24 Unmarried AND
Resident of Delaware OR Full-time student
Insurers may charge  102% more for dependent coverage past age 18
Florida  25 / 30 Unmarried AND
(25) Living with parent OR full-time student
(30) Previous conditions AND no dependents of their own
Georgia*  25 Full-time student at least 5 months of the year OR
Have pre-existing condition that prevents them from enrolling in health care
Idaho*  21 / 25 (21) Unmarried
(25) Unmarried AND full-time student
Illinois  26 / 30 (26) Unmarried
(30) Veteran
Indiana*  24 (24) No preconditions
Iowa  25 Unmarried AND
Is an Iowa resident a full-time student or disabled
Kentucky 25 Unmarried but insurers may charge more
Louisiana  21 / 24 (21) No preconditions
(24) Full-time student
Maine  25 Dependent and has no dependents
Maryland  25 Unmarried
Massachusetts*  26 Dependent; may stay on two years past dependency or until age 26, whichever comes first
Youth age 19-26 are eligible for low-cost insurance
Minnesota*  25 Unmarried
Missouri*  26 Unmarried
Montana  25 Unmarried
Nevada*  19 / 24 (19) Unmarried
(24) Unmarried and full-time student
New Hampshire  26 Unmarried AND
New Hampshire resident OR Full-time student
Youth under 26 may purchase through the state Healthy Kids CHIP program
New Jersey  31 Unmarried and with no dependents
New Mexico  25 No precondition
New York  30 New York resident AND unmarried
North Dakota  22 / 26 (22) Unmarried AND living with parents
(26) Unmarried AND full-time student
Ohio*  28 Unmarried dependent AND
Ohio resident OR Full-time student
Oregon*  23 Unmarried
Pennsylvania  30 Unmarried with no dependents AND
Pennsylvania resident OR Full-time student
Full-time students whose studies are interrupted by military service must receive extended coverage beyond the terminating age equal to their length of service
Rhode Island*  19 / 25 (19) Unmarried
(25) Student
South Carolina*  22 Unmarried AND Full-time student
AND parent is covered by small-group insurance
South Dakota*  19 / 29 (24) No preconditions
(29) Full-time student
Tennessee  24 Unmarried
Texas  25 Unmarried
Utah  26 Unmarried
Virginia  19 / 25 (19) No preconditions
(25) Resides with parent OR Full-time student
Washington  25 Unmarried
West Virginia  25 No preconditions
Wisconsin  27 Do not have insurance through employer
Full-time students called to active duty may receive extended coverage
Wyoming  23 Unmarried AND Full-time student AND parent is covered by small-group policy

*No age limit if the child has an incapacitating illness or disability