States let adult kids stay on parents' insurance

Washington -- At least 11 states have passed laws this year to reduce the number of uninsured residents by allowing the young and uninsured to remain on their parents' private health plans longer.

When the number of Americans without insurance is broken down by age, young adults 21 to 24 fare the worst. About one-third of them lack coverage, compared with about one-fifth of all adults, according to the Employee Benefit Research Institute.

"If you start by saying, 'Who's uninsured?' [then] this is a good place to start," said Alan Weil, executive director of the National Academy for State Health Policy.

Typically, young adults become ineligible for their parents' insurance at age 19, or later if they're in college. With many young people taking longer to establish their independence, states are requiring certain health plans to offer coverage to more young, single people.

So far about 26 states have increased the age limit for dependents, although many changes have strings attached. To qualify, young people may have to be single, without children, enrolled in college or perhaps financially reliant on their parents.

Allowing young adults to remain dependents during college is not new. But many recent expansions differ because they more often tie dependency to an age instead of a living or educational situation, said Judith Solomon, senior fellow at the nonpartisan Center on Budget and Policy Priorities.

These new laws have limits. States cannot regulate self-insured health plans, those in which typically large businesses and organizations pay employee claims out of their own coffers. Fifty-five percent of employees with health insurance have a self-insured plan, said Paul Fronstin, PhD, a senior research associate at the Employee Benefit Research Institute.

Instead, state laws apply only to fully insured plans -- where the other 45% of employees have coverage -- in which mostly small- and medium-sized businesses or organizations pay premiums to an insurer, which in turn covers the claims.

Also, none of the laws requires employers to help pay for older dependents' insurance. "They just make it available," Weil said. "And the biggest reason people don't have health insurance is because they can't afford it."

Members of America's Health Insurance Plans might not universally support every dependency mandate, said spokeswoman Susan Pisano. "[But] it's fair to say that our members have, in general, been comfortable with the proposals."

Although young adults age 19 to 29 account for 17% of non-elderly adults, they represent 30% of the non-elderly uninsured -- and that number has increased in recent years, according to a 2006 Commonwealth Fund report. The number of uninsured young adults increased from 11.2 million in 2000 to 13.7 million in 2004, the report found.

Although young adults tend to be healthier than other adults, the uninsured trend means fewer of them have access to primary care. For example, at least 54% of young adults age 19 to 29 who were uninsured at least part of the year in 2005 said they had put off necessary health care because of the cost, according to a survey in the report.

This raises concerns about both the long-term health of young people and their future eligibility for insurance. "The best thing to do is to try to have your coverage be continuous," AHIP's Pisano said.

New Jersey remains the most generous state in terms of eligibility. The state already had the highest income limit for the State Children's Health Insurance Program -- 350% of the federal poverty level. In 2006 lawmakers increased the age cutoff for young adults on their parents' insurance to 30, also the highest in the nation.

As many as 100,000 young people were expected to enroll as dependents. However, only about 15,000 have enrolled so far, said New Jersey Rep. Neil Cohen, author of the legislation.

Two problems have hampered the effort. It's been difficult to publicize the new eligibility limit, and the state's self-insured market is larger than expected. However, Cohen said, young adults who qualify have been insured for roughly half of the $7,000 annual cost of an individual policy.

Still, he said, states alone can't solve the uninsured problem because self-insured plans are regulated at the federal level. "The feds have to do something."

AHIP does not have a formal position on the New Jersey law, but Pisano said it differs from other states' laws because it only requires dependents to be a state resident and younger than 30, which is not the standard definition of a dependent.

The Medical Society of New Jersey, however, supported the bill and worked with Cohen on it, said MSNJ spokeswoman Judith Martin Waterman. "We think it's fabulous."

Utah acted first

Although New Jersey may have the highest age limit for dependents, Utah was the first state to increase the limit by boosting it to 26 in 1994. Families worried about uninsured young adults likely spurred lawmakers to act, said Mark Fotheringham, spokesman for the Utah Medical Assn.

Fotheringham said the UMA supported the age increase and that it has helped young people in Utah. "I suspect the roll of the uninsured would be a lot higher if we had not done that," he said. The Utah Insurance Dept. has not collected statistics on the law's impact but expects to soon, said Suzette Davies Green-Wright, director of the department's Health Insurance Division.

In Indiana, lawmakers had the health of young people in mind when they raised the age of dependents from 19 to 24 in late April. They were trying to expand access to preventive care and thereby reduce catastrophic illnesses in public health programs, said state Rep. Charlie Brown, chair of the House Public Health Committee.

Some of Brown's colleagues misunderstood the provision and thought it might create some sort of new Medicaid program, he said. In the end, Brown -- who supported increasing the age of dependency to 29 -- compromised on age 24 as the cutoff.

"Everybody came around and realized this was good for the state of Indiana," he said. Brown has asked the state's insurance department to estimate how many young people might gain coverage.

The Indiana State Medical Society didn't take a position on the provision, but generally supports efforts to reduce the number of uninsured, said spokeswoman Adele Lash.