The Cost of Repeal for Young Adults

U.S. PIRG

On March 23, 2010, President Barack Obama signed into law comprehensive health care reform legislation, known as the Affordable Care Act or ACA. Among its provisions are a number of measures aimed at reducing the cost and improving the quality of health care coverage options for young adults and other consumers.

Enactment of the law did not end the debate. Even the law’s strongest proponents acknowledge the need for improvements. Across the country, state legislators and Governors have been urged to slow or stop work on implementation of key provisions. The courts are weighing legal challenges to the law, and Congress is considering legislation that would repeal the law outright.

Before moving forward with repeal, however, policy-makers must consider the real-life consequences that their policy choices would have on millions of young Americans. U.S. PIRG has examined official research, data, and projections from independent sources, to provide a detailed picture of repeal’s impact on young adults. The evidence reveals that young people would face significant costs if the Affordable Care Act is repealed.

Insurance Costs Would Skyrocket for 1.2 Million Young Adults: 1.2 million young adults under the age of 26 would no longer be able to purchase coverage through their parents’ plans if the Affordable Care Act is repealed. For each of them, without the ability to remain on their parent’s plan, purchasing an equivalent level of coverage could be vastly more expensive on the individual market.

Young Women Would Pay Up to 50% More For Coverage than Men: Repeal would allow the pattern of discriminatory pricing which women experience on the individual market to continue. A 22 year old woman would continue to be charged up to 50% more than a 22 year old man for equivalent coverage.

Young Workers Would Face Higher Health Costs and Fewer Jobs: According to a report commissioned by the Business Roundtable, ACA provisions like health insurance exchanges and delivery and payment reform could reduce the per-employee cost of offering employer-provided health insurance by more than $3,000 a year by 2019. An analysis by Harvard economist David Cutler concluded that provisions in the law that hold down costs would also help create between 2.5 and 4 million jobs over the next decade. Repeal, by contrast, would drive up the cost of providing employer-sponsored coverage by more than $3000 a year and constrict the number of jobs created in the economy by up to four million. As a result, repeal can be expected to make it more difficult for young adults and their employers to find a good deal on coverage plans and make it harder to secure a job in the first place.

Consumers Would Be Subject to Rescission or Denial of Coverage When Sick: Were the law to be repealed, insurers would have every incentive to build their business plans around shedding sicker customers, rather than delivering care in a more effective manner or keeping their customers healthier over the long run. Insurers would once again be free to rescind coverage when any consumer, including young adults, suffered illness or injury, and pre-existing health conditions would continue to be grounds for denial of coverage on the individual market.

Looking Ahead

There is considerable room for debate about how our nation’s health policy is to move forward. Meeting the challenge of rising costs will require further action from Congress and the states. The Affordable Care Act itself will need to be adjusted and improved, to ensure it works as well as possible for consumers and businesses.

Whatever improvements may be warranted, policymakers must not ignore the impacts that their decisions will have on this generation of Americans. If legislators examine the evidence, they will find that repeal of the ACA would result in higher insurance costs and fewer jobs. Put simply, health care repeal comes with a price that young Americans cannot afford.