The “success” of the Affordable Care Act will depend, in part, on whether or not uninsured young adults will choose to enroll. According to a recent report from the Department of Health and Human Services about 24 percent of those who have enrolled through the end of 2013 are between the ages of 18 and 34. The Administration’s goal is that this group will represent 40 percent of enrollees by the time the 2014 enrollment period ends.
To better understand the issues related to enrollment decisions, we examined the characteristics of the young uninsured using data from the Medical Expenditure Panel Survey (MEPS) conducted by the Agency for Healthcare Research and Quality. MEPS is generally considered the most accurate source of health expenditure data. The survey is nationally representative and used verification data obtained from medical providers. We use data from 2011, the most recent year from which data are publicly available.
We focus on young adults between the ages of 18 and 30 and compare those who lacked insurance through the entire year with those who were insured for all or part of the year. In this note we provide a simple descriptive analysis of those who were uninsured. While the ACA will allow many to obtain needed coverage, our analysis does suggest why it is not proving to be an easy sell.
Self-perceived health status. A recent brief by the Urban Institute described the potential problem of enrolling the “young invincibles,” a group “generally perceived to be uninsured because they consider themselves healthy enough to go without coverage.” The MEPS data indicate young adults are very likely to view themselves in good or excellent health regardless of insurance status, with 94 percent of the uninsured reporting good or excellent health compared to 95 percent of the insured.
Coverage status and utilization. MEPS data indicate that the lack of insurance is a chronic problem for the young. Among those who did not have coverage throughout 2011, 83 percent also lacked coverage throughout 2010 and therefore went a minimum of 24 months without coverage.
Previous studies based on MEPS have shown that insurance is a predictor of utilization for many different demographic groups, and we found that young adults are no exception. Those with coverage used many more services than those without. The uninsured young averaged only 1.1 physician visits annually, compared to 3.3 visits for the insured. The uninsured averaged 1.4 prescription drugs or refills, while those young adults with coverage averaged 4 prescriptions. The uninsured had a 2.6 percent probability of a hospitalization, while 7 .1 percent of young adults with coverage were hospitalized.
Whether the uninsured use fewer services because they need less or because they experience difficulty paying for care is a critical issue that has challenged researchers for some time and goes beyond the descriptive analysis presented here. However, we do note that 7.6 percent of the uninsured young adults stated that they were unable to obtain care or had to delay care they needed, while only 3.2 percent of the insured reported an access problem.
An examination of incurred expenditures suggests why young adults may be reluctant to embrace the ACA. Among the uninsured the average expenditure for health care is $675. The median expense is actually zero, since 54 percent of young uninsured adults incurred no expense at all. The recent HHS report notes that 60 percent of the young adults (HHS included those ages 18 to 34) who have enrolled in the exchanges selected the “silver” plan, which usually has a deductible of around $2,500. MEPS data show that only 5.4 percent of the young uninsured had expenditures exceeding $2,500.
Take-up rates for employer-based coverage. While insurance status is associated with employment status, the relationship was not as strong as might be expected; 50 percent of the uninsured are employed, compared to 54 percent of the insured. Much of this is probably a function of what each group was offered. MEPS also collects data on “turn-downs” — people who elect not to take private insurance even though it is available through their employer. The overwhelming majority of persons offered private coverage accept it, with 86 percent electing coverage. Among young adults, 81 percent accept coverage. However, among young adults whose income level is classified as poor or near poor, the majority (51.2 percent) reject coverage.
If the low income young uninsured turn down coverage at work, it is not surprising that they have shown some reluctance to sign up with an exchange. It is quite possible that they are unaware that they may be eligible for subsidies that will greatly reduce their incurred cost. It is also possible that the penalty fee (or tax) for not having coverage this year does not offer sufficient inducement to enroll. The penalty rises in 2015 and 2016 and that may lead to higher rates of coverage for the young.
Looking forward. Despite their relatively good health and low use of services, it does not appear that the young uninsured decide to turn down coverage lightly. MEPS collects only limited attitudinal data, but the survey does show that only 25 percent of the young uninsured believe they are healthy and do not need insurance. Similarly only 30 percent believe health insurance is “not worth the cost”.
Our picture of the young uninsured shows a population that is healthy and uses little medical care. It does not, however, appear to be a group that rejects the importance of coverage. Instead, the young uninsured may value insurance but simply not see it as a high enough priority during a challenging economy. As fines go up and as more is learned about coverage subsidies, enrollment may increase substantially from the low levels being reported during the earliest stage of the program. The most recently released numbers do suggest an increase in overall rates of enrollment. We expect this acceleration to continue, although given the characteristics we have described reaching the target number of young enrollees is likely to remain a formidable challenge.