One simple way to fix Obamacare is to do something that no one is willing to do: Kick hundreds of thousands of young, mostly healthy Americans off their parents’ coverage.
Obamacare allowed young adults to stay on their parents’ plans until they turn 26. It’s a wildly popular feature and a successful one. The uninsured rate for 18- to 25-year-olds has dropped by more than 50 percent since 2010 — a steeper decline than for any other age group. Taking away this provision of the law – even though it might help stabilize the broader health system — is politically toxic to both Democrats and Republicans because it would antagonize millions of middle-class voters.
The under 26 provision has contributed to one of Obamacare’s biggest flaws: Not enough young, healthy people have signed up for coverage in the law’s insurance marketplaces, or exchanges.
That’s translated into financial losses for insurers, big premium spikes and dwindling competition. Those are the problems that Republicans repeatedly cite when they argue that Obamacare is collapsing, and therefore they have no choice but to take drastic action to salvage the health care system.
Still, the GOP appears poised to keep the under 26 allowance — a decision that undermines their goal of lowering premiums — for fear of the political consequences. The House’s repeal bill carries over the Obama-era provision, one of the few features that’s escaped controversy.
“It’s just that that was overwhelmingly popular and the insurance companies didn’t object,” said Sen. John Cornyn (R-Texas), who acknowledged stripping out the provision could help stabilize the market. “I don’t think we thought that far ahead, to tell you the truth.”
There aren’t reliable current figures for how many young adults are on their parents’ plans, but estimates have ranged from 2.3 million to 3 million.
As Republicans wade deeper into the quagmire of their own health care overhaul, less sweeping approaches to fixing an individual market that only about 5 percent of Americans rely on for coverage may begin to look more appealing. But while health care wonks might applaud pushing young adults into the Obamacare markets, that idea is about as popular on Capitol Hill as torturing puppies.
“This is sort of the problem of all of this: People want the feel-good stuff that was in Obamacare, but they don’t want to pay for it,” said Sen. Rand Paul (R-Ky.), who has been among the fiercest critics of the current GOP repeal plan. “Everybody complains about the premiums in the individual market but you have to ask yourself, why are the premiums high?”
Joe Antos, a health policy expert at the conservative American Enterprise Institute, points to another dynamic that makes the likelihood of scrapping the provision exceedingly remote. “It’s like a lot of things in politics: Once you’ve given a group of voters something it’s very hard to take it away,” Antos said. “This is really a giveaway to middle class voters.”
Indeed, a new POLITICO/Morning Consult poll shows 68 percent in favor of keeping the under 26 provision. And Republicans are already facing intense criticism over what they might take away by repealing Obamacare.
The Congressional Budget Office projected 24 million more people could wind up uninsured over a decade under the House bill. Premiums for older enrollees are expected to rise dramatically, and the GOP’s plan to cap Medicaid funding may force deep cuts to the benefits of millions of low-income Americans.
The scenarios spooked several Senate Republicans who say the bill needs major renovations. The House GOP, meanwhile, remains split between moderates who believe the legislation goes too far, and conservatives who think it doesn’t do enough. Amid that fractured environment, there’s little enthusiasm on Capitol Hill for further inflaming the debate by tossing young adults off their current coverage.
“The simple brass tack is you would be killing a program that is the only overture to the middle class,” said Doug McAuliffe, a Republican political strategist, speaking of the under 26 provision. “That’s one of the few points they can take advantage of.”
The trade-off is that Republicans make it harder on themselves to assemble a workable replacement. The people on their parents’ plans are particularly attractive for two reasons, Antos said. They’re predominantly young and healthy, and aren’t likely to run up big medical bills. What’s more, since they currently get coverage through their parents’ work-based plans, they’re likely from middle-class or wealthier households.
“Dad might well say, ‘I’m going to buy the coverage because if you get sick I’m going to end up paying for it anyway,’” Antos noted. “It’s a combination of good risk and much more likely to be good customers in terms of paying the bills.”
That allure even made the Obama administration think twice during its early efforts to revamp the health system. Some officials worried that keeping young adults on their parents’ plans would ultimately hurt the Obamacare markets, said ex-Sen. Tom Daschle, who served as a key adviser to the White House at the time. But those concerns were overruled after the administration decided its top priority was to get as many people covered in whatever way possible.
“It was the only way to reach fairly consequential numbers of young people,” Daschle said.
In hindsight, he added, the provision was “counterproductive.” And while the Obama administration debated different tactics for nudging young people off their parents’ plans and into the individual market, Daschle said they ultimately concluded it would be too politically painful to cut that benefit.
Seven years later, Republicans are coming to the same conclusion, even as they vow to tear down Obamacare. Antos says the reason is pretty simple: Parents of the young adults benefiting from the provision are high turnout voters.
“They’re probably about as likely to vote as senior citizens,” he said. “That’s a very powerful group. Who’s going to cross them?”