Co-written by Matt Wolfson
In the run-up to the Supreme Court's decision regarding the Affordable Care Act (ACA), the Heritage Foundation has released an attack against the ACA's provision extending dependent coverage to young Americans up to age 26. Heritage's piece is notable in that it manages to both be factually inaccurate and, even when it gets the facts right, riddled with internal contradictions. Keep in mind that the dependent coverage provision is one of the most popular provisions of the ACA, with support from both Democrats and Republicans, and has directly resulted in more than 3 million young adults gaining insurance coverage since 2010.
The critique begins by citing data from a recent study by the Employee Benefit Research Institute, and using that data to contend that the dependent coverage clause has produced two negative effects: First, that young adults are now switching from their own employer plan to their parents'; and second, that, because this shift causes premiums to increase, employers have stopped offering health insurance because it's too pricey. The real solution, we are (predictably) told, is to "focus on individual choice and market interactions."
The glaring problem with this argument is that it is founded on a basic misunderstanding of how the dependent coverage provision actually works. The ACA could not have incentivized young Americans to shift from employer-based insurance to dependent coverage because the law specifically mandates that, until 2014, family plans do not have to cover individuals who are receiving or who have been offered employer-based health insurance. Section 18011 of the law explicitly states that "...the provisions of [the extension of dependent coverage provision] shall apply in the case of an adult child ... only if such adult child is not eligible to enroll in an eligible employer-sponsored health plan." Given the legal constraints, an adult child could only switch from their employer plan to their parent's plan if the parent's employer willingly lets them enroll. Of course, that would directly contradict the Heritage claim that dependent coverage up to 26 is somehow harming employers.
But the problems continue. The data analysis also falls short, even taking into account the cautionary caveats that pepper the piece ("while it is too early to make a definitive connection"; "while it is still too early to know the specific effects of the provision"; "these are early effects, and more time will be necessary to understand the real impact"). In fact, far from coming too "early" to allow for "definitive" interpretations, Heritage's data shows precisely why we need the ACA, and particularly the dependent coverage provision, in the first place.
Consider the cited facts:
• "20 percent of individuals had plans in their own names before Obamacare. After the regulation's implementation, this share dropped to 17.5 percent."
• "The share of individuals with dependent coverage changed from 24.7 percent to 27.7 percent in the same period of time."
• Finally, "15 percent of additional young adults cited that their employers did not offer health insurance."
All of this data could be accurate; it's the interpretation that's faulty. Where Heritage errs is in confusing causality, blaming the 2-year-old ACA for longer-term trends caused by the market. In fact, the ACA and dependent coverage expansion is a direct response to a flawed system that left over 25 percent of young adults uninsured and continued to dump employer-based coverage.
For instance, the fact that individuals with employer-based coverage dropped 2.5 percent over the past two years is unsurprising considering that, in the past decade, the number of employer-provided plans have spiraled downward: over the last 10 years, 12.8 percent of 18 to 24-year-olds lost employer-based insurance. This trend started well before the ACA. That this drop was far steeper among young Americans than any other demographic is a fact which even Heritage admits, albeit in curiously indirect terms (the percent of young Americans without employer insurance is, the article informs us, "significantly different than any other age group.") Young people continue to find jobs that do not offer benefits, which makes the coverage gains on dependent coverage even more critical for this generation.
In sum, the data here speaks to exactly the reason why Americans need the Affordable Care Act: after decades of letting a flawed market work alone, health care remained increasingly overpriced and unavailable for too many Americans, especially young adults. The Affordable Care Act was the first big step toward changing that trend and it has already paid dividends for millions of young Americans.