Thanks, Mom and Dad: Coverage and Selection among Young Adults after the Affordable Care Act's Dependent Coverage Expansion

Among the earliest coverage-related provisions of the Affordable Care Act to take effect was the extension of health insurance coverage to child dependents up to age 26. This paper analyzes how the young adult coverage provision affected the extent of coverage among young adults and the risk mix of young adult enrollees in the private insurance market, and is, to the best of my knowedge, among the first to use medical claims data to gauge the impact of the ACA on young adults' insurance. Using the MarketScan Commercial Claims and Encounters database, I analyze the health expenditures of young adults before and after the reform and in comparison to other age groups, testing for evidence of risk-based selection among insured young adults by coverage type. MarketScan enrollment data show a spike in the number in young adult dependents starting in January 2011 but an absolute decline in the number of young adults covered during 2010, consistent with seasonal patterns of previous years. Dependent children accounted for 50% of all young adults ages 19-25 included in the MarketScan sample in 2010 and 59% of the sample in 2011.

I employ difference-in-difference methods to compare changes in average health expenditures among the young adult population relative to other age groups, before and after the reform. Preliminary results show that the newly insured appear to be healthier (i.e., lower expenditure) than the pool of previously insured. I also find evidence suggesting that less-healthy young adults tended to migrate from their own-employer sponsored coverage to parents’ coverage; among non-dependent young adults, average expenditure decreases after the reform, particularly for ages 22-25.