Popularity, cost cited in young adult coverage

More than 600,000 young adults have taken advantage of the health reform provision allowing them to stay on their parents’ insurance until age 26, Kaiser Health News reported this week.

Vicky Kimbrell’s 25-year-old daughter was among them.

Kimbrell’s daughter works part time but is not eligible for insurance benefits. Kimbrell, an Atlanta health law attorney, said she tried to get a private insurance policy for her daughter last year when she was graduating from college.  An insurer denied coverage because of a pre-existing medical condition.

Kimbrell, who declined to give her daughter’s name for privacy reasons, citing the health condition, said her own health plan will cover her daughter under her dependent coverage because of the reform requirement.

As health insurers add or keep young adults on their rolls, though, business groups express concerns about the costs of the dependents provision.

The National Federation of Independent Business, which represents small businesses, said the requirement to cover young adults adds an estimated annual 1 percent increase to health insurance premiums.

Employers, not government, should make the decisions on coverage for dependents, said Amanda Austin, director of federal public policy for NFIB, in an interview this week.

That young adult group traditionally has a higher uninsured percentage than other age brackets.  More than 40 percent of Georgians ages 19 through 24 had no health insurance in 2009, according to a Georgia State University report.

The health reform law in general, meanwhile, continues to divide Americans. On Tuesday, the U.S. House of Representatives voted to disrupt the flow of federal dollars for health insurance exchanges, required under reform to operate in each state. The Democratic-led Senate will probably ignore the House action, and the White House issued a veto threat in the event it passed, the Associated Press reported.

Georgia is among more than 25 states that have joined in a lawsuit to overturn the federal health reform law, which has been denounced by the state’s Republican political leadership.

Georgia joined the other states Wednesday in filing a brief challenging the Affordable Care Act with the 11th Circuit Court of Appeals.

“In addition to granting Congress unprecedented power beyond what is enumerated by the Constitution, the health care law passes on massive costs and additional requirements to the states,’’ said Georgia Attorney General Sam Olens in a statement. “Georgia simply cannot afford for this law to stand.’’

The reform provision on young adult coverage, meanwhile, has helped many families, according to the Kaiser Health News report, which used health insurers’ enrollment numbers to arrive at the 600,000 figure.

The Affordable Care Act required health plans and employers to offer coverage to members’ adult children until age 26. That requirement remains in place even if the children no longer live with their parents, are not a dependent on a parent’s tax return or are no longer students.

WellPoint said the dependents provision was responsible for adding 280,000 new members. WellPoint is the parent company of Georgia’s largest health insurer, Blue Cross and Blue Shield of Georgia.

“This new option for young adults has proven very popular,’’ said Cindy Zeldin of the consumer advocacy group Georgians for a Healthy Future. Young graduates entering the labor market often land jobs that don’t have health insurance, she said. “This provision provides some breathing room for new graduates and peace of mind for their parents.”

The dependent coverage provision went into effect in September 2010. But health plans didn’t have to adopt the change until the start of the next health plan year, which for many employers was January.

The U.S. Department of Health and Human Services has estimated that 42,200 young adults in Georgia could gain health coverage from the dependents provision.

The young adult age group tends to have high uninsured levels because they typically have less income, and also because healthy young people “tend to think of themselves as invulnerable,’’ and believe they don’t need coverage, said Bill Custer, a health insurance expert at Georgia State.

Many of those accepting the new dependents coverage have pre-existing conditions, which would increase employers’ costs, he said.

The state employees’ benefits plan, which covers more than 700,000 people, has projected  annual expenses of about $48 million for the additional members up to age 26.  In  2011, those expenses are offset by increased employee premiums, making the net cost to the plan about $25 million, said the state Department of Community Health, which oversees the State Health Benefit Plan.

Helen Darling, CEO of the National Business Group on Health, which represents more than 300 large employers, told Kaiser Health News that employers generally don’t like the idea of anything that will add to their health costs. “I don’t think anyone is eager to spend more money,” Darling said. “This is not something employers would have done on their own.”

NFIB’s Austin told Georgia Health News that the young adults requirement isn’t as “egregious’’  as other reform provisions, such as the mandate for many businesses to offer health coverage to employees.

Still, the cumulative costs of reform-related increases add up, Austin said.

Controlling the rising cost of health insurance is the No. 1 concern for small businesses, NFIB says.