One of the most obviously popular and successful of the Affordable Care Act's many mandates is that all family plans include dependent coverage until they turn 26 years of age. This was also one of the first regulations to go into effect, fully four years before the exchanges or the Medicaid expansion began. Polls and measures of uninsurance showed that while the insurance rates of many groups worsened over the following years, rates in those who might benefit from the young adult provision have actually fallen.
I've covered the evidence on how this provision has affected outcomes more than once on this blog. One of the main concerns of this mandate, however, is that this would increase the cost of premiums for insurance, even for those who don't need the extra coverage. Now, data are becoming available that might shed some light on whether this concern holds merit. In this month's Journal of Health Economics, Briggs Depew and James Bailey published a study that can help. "Did the Affordable Care Act's dependent coverage mandate increase premiums?"
They used three sources of data to study this relationship. The first was the Medical Expenditure Panel Survey - Insurance Component (MEPS-IV), which contains information on premiums, employer contributions, and deductibles for insurance plans. The other two were the Survey of Income and Program Participation and the National Health Interview Survey, which contained information on employee contributions to premiums and out-of-pocket expenses. These were used to confirm findings from MEPS. In addition, the Current Population Survey from 2004-2013 was used to look at how potential wage effects were affected by the provision.
Analyses were constructed to determine how premiums changed over time, using individual plans as a control. Whatever other effects were changing premiums should have affected those plans similarly, but with no effect from the young adult provision. They used a difference-in-difference analysis which is described in detail here.
Their analysis showed that there was an increase in family plans above what you'd expect from looking at single-coverage plans, to the tune of about $360-$400 on average. Given that the weighted average of a family plan's total premiums was $14,315, this increase constituted 2.5% -2.8% overall.
There's an interesting wrinkle, however. The analyses showed that although there was a significant increase in premiums costs, it seems that employers passed little of this expense onto employees in terms of increased employee contributions for family plans. There wasn't a statistically significant increase in out-of-pocket expenses, either, although the authors point out all the point estimates were positive.
But for those who continue to debate the merits of the young adult provision, this study provides useful data points. First, it does appear that the dependent coverage mandate is associated with an increase in premiums for family plans of 2.5%-2.8%. However, it doesn't appear that employers passed on this increase to employees in the form of increased contributions or out-of-pocket expenses. It is possible that they raised the prices of all plans, including single coverage plans, to compensate. This would mean that individual plan purchasers are subsidizing the increased cost of insurance of families. It's also arguable that employees indirectly pay the cost of all health insurance, even if it's in the form of foregone wages because of employer health insurance costs.
Whether this increase in premiums is "worth it" is beyond the scope of this study. The increase in premiums seems about equivalent to the increase in people covered on family plans. Further debate is to be expected.
From the editors: The 2015 Annual Research Meeting includes a theme on coverage and access. Review sessions and abstracts here.