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Health Care Reform Will Remake Health Insurance Market For Young Adults

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Kristin Bohacek was uninsured for three years because of a bout with cancer. Under the health care reform law, health insurance companies won't be able reject people with pre-existing conditions starting in 2014.
Kristin Bohacek was uninsured for three years because of a bout with cancer. Under the health care reform law, health insurance companies won't be able reject people with pre-existing conditions starting in 2014.

A revolution may be on the way for the under-30 set: Thanks to the provisions put in place under the new health care law, the days of needing a job just to get affordable health insurance may be over.

The shift in how Americans can get health insurance, in some ways a little noticed effect of the sweeping 2010 law that will be in full force by 2014, could be particularly radical for young adults. They are uninsured at higher rates than any other age group and face a job market less likely to provide health benefits than the one their older siblings and parents entered in their 20s.

"If you want a career that doesn't tend to be associated with companies that provide health insurance coverage, you'll have more options," said Sara Collins, the vice president for affordable health insurance at the Commonwealth Fund. "It frees people's work-life decisions."

Adults under 30 are more likely to go without health insurance than children or older adults. Those just starting out are more likely to be unemployed, work in industries like retail and food service that don't provide health benefits, freelance, have part-time jobs or simply earn less because they're at the beginning of their careers.

A Commonwealth Fund survey found that 10.4 million Americans between the ages of 19 and 29 had no health insurance during at least part of the 12 months before November 2011. That's 39 percent of people in that age group, more than any other.

Kristin Bohecek, 27, a graphic designer in Dallas, developed skin cancer when she was in college. Her family's plan covered the surgery but those benefits ended after graduation. She paid more than about $400 a month to stay on her parents' insurance for about a year and a half under COBRA benefits, but when that ran out, she went uninsured for almost three years despite being employed during most of that time.

Health insurance companies repeatedly rejected her until one agreed to sell her a policy that excluded any expenses related to cancer: "I was so nervous something was going to happen and they wouldn't cover it," Bohecek said.

Those fears subsided three years ago when she got a job with health benefits but Bohacek realizes that, until health care reform's guaranteed coverage for people with pre-existing conditions begins in 2014, she has a reason to keep that job, besides the fact that she likes it. "I would stay here even if other stuff got bad," she said.

The health insurance coverage expansions that take effect in 2014 will extend Medicaid benefits to as many as 8 million young adults who earn up to 133 percent of the federal poverty level, which is $14,856 this year. The law will also provide new tax credits for up to 9 million young adults with incomes up to four times the poverty level -- $44,680 in 2012 -- to help pay for private health insurance, according to census data analyzed by Young Invincibles, an advocacy organization.

The new law includes provisions specifically created for young adults. There will be low-cost health insurance solely for people under 30, sometimes called "young invincibles" coverage. The plan will have a high deductible, about $6,250, and can't be used with tax credits, but it may appeal to healthy people because it's expected to be the cheapest option for those who don't qualify for Medicaid or get health benefits at work. People up to age 26 have been allowed to stay on their parents' health plans since last year, a benefit that has provided coverage to 6.6 million young adults who otherwise would have been uninsured, according to the Commonwealth Fund.

Young adults who may choose to go without insurance because they don't believe they need it, because they would prefer to spend their money on other things, or because they simply can't afford it, also will be compelled to get coverage or face a financial penalty under the law's individual mandate.

Jobs are the most common source of health insurance for Americans and workplace health benefits cover 154 million people, according to the Congressional Budget Office. But younger workers may not be able to count on jobs with benefits -- today or in the future. The percentage of employers offering health insurance fell from 68 percent in 2001 to 60 percent last year, according to a survey by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust.

Caitlin Justice, 28, just started a full-time job with health benefits last month. "I wanted this job I have now for a lot of reasons but one of the main reasons was health coverage," she said.

Justice worked at least 40 hours a week but couldn't afford to buy insurance for two stretches of the past four years. "That's just not feasible for a young person working part-time jobs," she said. "We all graduated at a time when the economy was just tanking."

Still, some young adults will take a hit when the new law goes into effect. The reforms intend to make health insurance cheaper for older, sicker people in part by getting younger, healthier Americans to pay into the system during a time in their lives when their health care costs are low.

Richard Cooper, a 26-year-old attorney in Miami, could be one of those who will see premiums rise. Cooper was uninsured for long stretches of the past six years until buying a plan for himself and his wife, which costs $300 a month, in June. They couldn't afford coverage before.

But Cooper opposes the law's individual mandate that requires him and his wife to get health insurance, and he knows his family's earnings are too high to qualify them for tax credits. Cooper also objects to the law's requirements that health plans cover things such as mental health and maternity, which he left out of his current coverage to save money.

"That's one of the things I'm sort of leery about," he said. "I'm going to be paying for things I don't need."

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