In a 2006 Washington Post article describing Massachusetts' then-nascent health insurance legislation—which mandates that all citizens making 150 percent or more of the federal poverty level purchase health insurance or face fines—a Princeton professor used a telling metaphor to describe the system.
Uwe Reinhardt heralded the Bay State's implementation of the new policy, saying that it would deprive the uninsured of the "freedom to mooch." "Massachusetts is the first state in America to reach adulthood," he proclaimed. "The rest of America is still in adolescence."
But what are the impacts of Massachusetts' still-young insurance policy on citizens who are themselves trying to make the transition from adolescence to adulthood?
The term commonly used by insurance companies to describe the young adult market—"young invincibles"—expresses insurers' and policymakers' exasperation with young Americans, whose reluctance to acquire health insurance may be perceived as mere youthful irresponsibility. However, as chief marketing officer of the Commonwealth Health Insurance Connector Authority Kevin Counihan acknowledged somewhat empathetically, "If you have to boil ['young invincibles' failure to purchase health insurance] down to one factor, it's affordability."
Defining the Demographic
Insurance companies nationwide define "young invincibles" loosely as those ranging in age from 19 to 29. In Massachusetts, legislation and health insurance policies lump individuals aged 19-26 together—and certain exemptions and special plans have been implemented to accommodate the financial needs of that age group. Though eligibility for the two state-subsidized health care programs, MassHealth (free but mandatory insurance for those who make 150 percent of the federal poverty level or less) and Commonwealth Care (subsidized insurance plans for those earning over 150 percent but not more than 300 percent of the federal poverty level), is based solely on income, a third tier of state-approved plans for individuals making more than 300 percent of the federal poverty level, called Commonwealth Choice, offers low-premium packages specifically for those aged 19-26.
Another feature of Massachusetts' health insurance legislation is also potentially beneficial to people in that age group: new laws allow young adult dependents to remain on their parents' plans until they turn 26.
A recent article in the Fort Worth Star Telegram acknowledged that young invincibles comprise a disproportionately large portion of the uninsured nationwide—the age group makes up 17 percent of the U.S. population under 65, but a whopping 30 percent of the uninsured in the same broad age range. In Massachusetts, due to new health care mandates as well as the increased accessibility of programs, 96 percent of all residents now have health insurance.
"We're trying to close a relatively small gap," said Counihan, though he acknowledged that young invincibles continue to pose a challenge to Massachusetts insurers. He estimated that about 46,000 individuals aged 19-26 were enrolled in all Commonwealth Care programs as of mid-December, 2007. And about 3,700 young adults had signed up for Commonwealth Choice plans intended specifically for their age group.
Strategies to Close the Gap
Counihan described 19- through 26-year-olds as one of four larger markets the Commonwealth Connector has attempted to address since mandatory insurance laws were signed in April, 2006. However, he noted that they make up an "extraordinarily unique" demographic composed of many "micro-markets," including full- and part-time college students, those enrolled in technical or trade schools, high school graduates who enter the job market immediately, the employed, intermittently employed and unemployed, all with distinct needs and potentially disparate incomes and expenses.
Counihan acknowledged that expenses often overwhelm the newly financially independent: auto insurance and maintenance, rent, student loans. However, he stressed the importance—and difficulty—of "communicating [young adults'] need" for health insurance. Of course, the young aren't exactly invulnerable physically: as the Fort Worth Star Telegram notes, "There are 3.5 million pregnancies annually among the 21 million [American] women in their 20s. Young adults are the most likely age cohort to visit emergency rooms for injuries. One-third of HIV diagnoses affect young adults."
Cancer, diabetes and other serious ailments are not unheard of amongst those in their 20s. And illness and injury are often financially devastating to the uninsured. A lively but frightening article in a recent issue of New York magazine contains tales of financial hardship —even ruin—following unexpected health crises amongst uninsured 20-somethings.
And if young invincibles are ultimately unable to pay exorbitant medical bills, the burden of their expenses falls on other taxpayers.
Does Prudence Pay?
Acquiring health insurance may be responsible and farsighted, but, of course, it's not always appealing to carefree 20-somethings. As Kevin Counihan remarked, "Health insurance isn't the sexiest purchase in the world." Counihan described marketing techniques aimed at young invincibles, including extensive ads run on New England Sports Network to target young men, who are statistically especially unlikely to be insured. He and Connector Board spokesman Richard Powers also mentioned preliminary plans to utilize digital forums popular among young people, such as Myspace, Facebook and YouTube, to raise health insurance enrollment.
But in spite of the best efforts of the Connector board, there are still substantial challenges to the affordability and sustainability of health insurance for people between 19 and 26.
The cost of living is relatively high in the Bay State; as Lou Malzone, a union health plan manager and member of the Connector Board, told the Wall Street Journal in May, 2007, "In Massachusetts, you have to make $30,000 or $40,000 a year just to survive."
However $30,636 is the cutoff annual income for state-subsidized insurance for single-person households. Those whose annual earnings are just slightly higher than this figure may experience a "cliff effect": while Commonwealth Care plans currently range from $18-$106, individuals who enroll in Commonwealth Choice plans may have substantially higher medical expenditures. A Commonwealth Connector press release issued last May put the cost of basic Commonwealth Choice insurance for young adults in Western Mass. at the seemingly affordable rate of $115 a month. However, this was a low-premium, high-co-pay plan which did not include prescription coverage. Individuals seeking more comprehensive plans—or stricken with an unforeseen illness or injury—may find themselves struggling with co-pays and higher premiums.
And rates are only going up. Penalties for non-compliance will increase exponentially in 2008: while citizens who made more than 150 percent of the federal poverty level in 2007 but did not purchase insurance will face fines of $219, those who do not acquire health insurance in 2008 may owe as much as $626 if they are 26 or younger (and up to $912 if they are over 26 and ineligible for subsidized plans).
As has been widely reported, the health care system in Massachusetts is strained by the influx of new insurance applicants (an estimated 300,000 in 2007), and the stress on healthcare organizations will have financial implications for Bay State citizens. Copayments and prescription drug costs may rise to accommodate inflation and the recent flood of enrollees.
Commonwealth Care premiums will be re-evaluated and raised in July, 2008; Commonwealth Choice premiums are adjusted monthly for inflation. The Connector Board has attempted to mitigate rising costs by encouraging both Commonwealth Care and Commonwealth Choice providers not to raise premiums more than five percent next year. However, for many citizens—especially young invincibles struggling under the weight of student loans and searching for elusive traction in their careers—even a five percent increase may be a significant strain.
