The number of young adults age 19 to 25 who are covered by their parents' employer-provided health insurance policies increased dramatically with the implementation of the Affordable Care Act, according to a study by Indiana University economists.

The study, released as a working paper by the National Bureau of Economic Research this week, examines the impact of the requirement that all private insurance policies that offer dependent coverage must offer to cover children up to age 26, one of the first provisions of the federal health care law to take effect.

Young Patient

Authors are Yaa Akosa Antwi, assistant professor of economics in the School of Liberal Arts at Indiana University-Purdue University Indianapolis; and postdoctoral fellow Asako S. Moriya and professor Kosali Simon, both in the School of Public and Environmental Affairs at Indiana University Bloomington.

"There's been a great deal of debate regarding expansion of public spending to cover the uninsured," Simon said. "In the case of young adult coverage, however, the policy has had a significant impact through an expansion of private coverage. Although prior reports have noted that young adults are more likely to be insured now than before the law, our study is the first to specifically follow dependent coverage through parental employer policies."

Other findings include:

-- The law had an immediate impact on both dependent coverage and own coverage before implementation started in September 2010.

-- Young men were twice as likely as young women to become insured after the law took effect.

-- Minorities were less likely than other young adults to add coverage under their parents' plans, consistent with evidence of lower availability of employer health insurance among minority parents.

-- Young adults who were single were more likely to be added to parental coverage than those who were married, even though the law applies regardless of marital status.

The study relies on nationally representative data from the Survey of Income and Program Participation. This survey, conducted by the U.S. Census Bureau, includes detailed demographic questions about the health insurance status of parents and children.

The study examines not only the period when the law was implemented, from September 2010 to September 2011, but also the six months leading up to implementation after the law was enacted, and two months after implementation was completed. The period between enactment and implementation proves to be important because some health insurers said they were changing their dependent coverage rules for young adults in anticipation of the implementation of the law.

"We find that the willingness of some health insurers to allow young adults to stay on their parents' insurance plans before they were legally obligated to do so led to a noticeable increase in parental coverage," Akosa Antwi said.

In addition to comparing dependent coverage for 19- to 25-year-olds before and after the law, the researchers examined control groups of slightly younger and slightly older children and considered changes in parent insurance rates to gauge the extent to which the increase was due to the law.

"Around the time when the mandate was introduced, there were many other things going on, including a recession and declining trend in employer-provided policies," Moriya said. "Our analytic approach enabled us to isolate the effect of the mandate from these factors."

The study provides the first detailed and highly rigorous analysis of the dependent-care provision of the Affordable Care Act, examining not only its overall effect on coverage but policy-related questions about the effect of the law on other sources of coverage and whether different populations were affected in different ways.

The researchers write that given the dramatic changes in insurance coverage from the dependent-coverage provisions of the Affordable Care Act, additional outcomes should be evaluated in future studies. Those include health and health care consequences as well as financial health implications of added coverage; whether coverage leads to an increase in self-employment or other changes in employment and educational pursuits among young adults; how the costs of dependent-coverage mandates are divided between employers and employees; and how take-up of this provision holds up as other health care changes are debated and implemented.

Working paper info: http://www.nber.org/papers/w18200.pdf