An important and positive attribute of the Affordable Care Act was the provision allowing young adults to stay on their parents' health insurance policies until age 24. Many of us faced this problem when our children finished college but were not yet established in employer-based insurance plans. An article by Kevin Sack in the New York Times summarizes the effect of this and contains the chart shown to the left.
Kathleen Sebelius, the secretary of health and human services, understandably and rightfully claimed victory on this point.
But embedded in the article is one of those quiet give-aways that remind us that the laws of economics hold. It reminds me of the old joke: "Gravity. It's not just a good idea. It's the law."
The point made was that this provision, alone, accounted for an increase in insurance premiums. "Mark F. Olson, a senior actuary with Towers Watson, the human resources consulting firm . . . and several insurance industry spokesmen credited it for raising enrollments and premiums by between 1 percent and 3 percent at many firms."
In another article, we learn that Hewitt Associates puts the average premium hike nationally at 8.8 percent, a result of several factors in addition to the health bill. So, something like 1/8 to 1/3 of the average premium increase might be due to this provision of the law.
Is that a lot or a little? I personally think it is worth it and good policy. But whatever the amount, it belies the claim made by the President during the health care debate that we could have access, choice, and lower costs. Indeed, when the law's provisions concerning guaranteed issue (e.g., eliminating exclusions for pre-exisiting conditions) come into effect in future years, there will be yet another bump up in rates to cover those people.
TANSTAAFL means "There ain't no such thing as a free lunch."
It's not just a good idea. It's the law.