Health insurance a tough sell for young people

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Bob Moon: It has been exactly six months since President Obama signed the health care reform bill. And so today a bunch of new provisions of the law take effect. Insurers can no longer impose lifetime caps on benefits nor can they deny coverage to children with pre-existing conditions. And they can't cancel your policy just because you get sick. The companies hope one change will bring thousands of healthy young adults onto their rolls. A new provision allows adult children to remain on their parents' insurance policies until they turn 26, up from 19. For most families, the change kicks in when their policies renew.

From our Health Desk at WHYY in Philadelphia, Gregory Warner looks into the implications.


Gregory Warner: Insurance companies have always had a hard time selling their products to the under-30 crowd.

Aaron Smith: The perception is that insurance products are bad, and you can't really trust them and you don't know what the fine print is going to say.

28-year-old Aaron Smith deals with that suspicion a lot. He's the founder of Young Invincibles. It's a health care advocacy group for young adults.

Smith: Let me pull up our "Getting Covered" Facebook page here.

Smith's website lists the top five reasons that you need benefits, such as...

Smith: You could always get hit by a bus. That resonates with people to a surprising amount.

But price resonates even more. Smith says that under this new health care provision, a person shelling out $150 a month for his own policy will now be able to join a parent's plan for around $35. Gone are the state-level restrictions that said that a child had to be in school or unmarried or live in the same state as his parents.

Smith: I myself was uninsured for six months after I graduated from college. That is almost the norm now, that you're uninsured when you graduate. That process is going to change.

If parents sign up their children, and young adults opt to pay for benefits that many have learned to live without.

Joan Alker: That is a change. And so it will take some time for people's thinking to change.

Joan Alker directs the Georgetown Institute for Children and Families. She says that when policy experts try to predict how many young people will sign up for this plan next year, they come up with numbers anywhere from 500,000 to just over two million.

Alker: So, that's a big range.

If the number of sign-ups is in the millions, that's good for the insurance industry. They get an infusion of healthy young customers that rarely see the doctor. They're cheap to insure, so the premiums that businesses pay will rise, but only by .5 to 1 percent.

If the number of sign-ups, though, is in the low end -- closer to 500,000 -- that means that people who did sign up are less healthy, more in need. In that case, premiums could rise more and employers could pass on those higher costs to workers.

Alker: They could start structuring their plans, so that if you are picking up your family coverage, you have to pay more if you have three kids on your plan as opposed to two kids. And that would really focus the increased costs on the families who are using it.

Discouraging some families from signing up at all. It's like a huge balancing act, where in order to keep costs low, millions of young people or their parents need to decide to take the plunge together.

Freddy Ramos lives in his mom's house in north Philadelphia. When I meet him he is cleaning his bedroom. The walls covered with Britney Spears posters.

Freddy Ramos: I always feel like I need to take these posters down, but my friends are like, "No no, don't take 'em down! I like 'em, I like 'em."

Warner: Why do you feel like you need to take them down?

Ramos: Part of growing up.

Ramos is 21 years old, and he's still looking for a job. He hates having to depend on his mom's paycheck. He's not sure he wants to sign up on his mom's health plan next year.

Ramos: She'll file the paperwork, her job will see it, and they'll go, "Whoa, you have a 21-year-old son who needs health insurance?" I really do feel like that will count against someone at their job. They'll paint that brush with, oh, "Here we go, we have moochers."

Warner: But is it also, Freddy, that maybe you feel a little bit of embarrassment or a little bit like you should be further along?

Ramos: Oh that's definitely tied in there. The whole self-doubt and all that stuff, I should have my own health insurance from my own job, you know.

Ramos tells me he'll probably only sign up if he gets sick. Which is of course exactly what the insurance companies don't want to hear. They want Ramos to see insurance as a necessity, not as a luxury that he hasn't yet grown up enough to earn.

In Philadelphia, I'm Gregory Warner for Marketplace.

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