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Dependent young adults cost insurers extra $2M, research shows


The reform law's provision allowing young adults to remain on their parents' health plans until they're 26 years old is costing insurers as these new members use more medical services than their peers and incur high healthcare costs, new research shows.

That's because 60 percent of these young adults' care was for mental health, substance abuse and pregnancy services and treatments, compared to just 30 percent of young adults with their own insurance coverage, according to an Employee Benefit Research Institute study.

Analyzing one company's 700 young adults who signed onto their parents' health plan in 2011, which was the first year the provision was in effect, EBRI found that 42 percent of claims among dependent young adults was for mental health and substance abuse, whereas it was just 28 percent of independent young adults' claims. And claims for pregnancy care accounted for 19 percent of dependent adults but only five percent for independent adults.

As a result, the new young adult members incurred an average of $2,866 in health costs, totaling about $2 million.

These findings support earlier research, including a report from consulting firm Oliver Wyman, that predict insurers will raise premiums as much as 42 percent for young adults to compensate for the reform law's age rating provision, which limits the amount insurers can charge older members to only three times that of younger members, FierceHealthPayer previously reported.

To learn more:
- here's the study

Related Articles:
Report: Predictions of rate shock for young adults are 'overstated'
HHS rejects insurers' call to delay age-rating restrictions
Humana CEO: Reform's age-rating rule will raise costs
Premiums will rise 42% for young adults under reform
Young adults may forgo coverage due to 'rate shock'