The first consideration is that young adults facing chronic unemployment—thanks to government policies that have retarded economic growth—commonly return to their parents' home. Understanding that this is what the economic "new normal" looks like, the Obama administration sought to avoid a potential political storm by providing a benefit normally connected to holding a job for one of its most reliable support groups.
Second, government's actuaries are well aware that this much-touted benefit basically costs nothing. Actuarial and other research suggests that the average male sees a physician six times between the ages of 21 and 35. The parental coverage provision seemed like a "freebie" for the administration's universal coverage sales pitch.There's political safety in large numbers.
Third, ObamaCare's financing won't work unless "young healthies" (or their parents) pay through the nose for coverage under parental plans or via the individual mandate. The 18-26 age group is the lowest user of care, the least costly to cover and the most profitable of all health-insurance coverage. Yet the group faces extraordinarily high rates.
In 1993 I was president of Fortis (now Assurant ...) Health Care, a major health-insurance company. Sam Shriver, one of our brokers, noted that students graduating from Loyola College in Baltimore (he sold these students their group health-care coverage) were without health insurance before they landed their first jobs. We devised a "transition" product to provide graduates with two years of affordable coverage.
The product became very successful because it provided catastrophic coverage, including for things like motorcycle accidents, and was inexpensive. It became one of the company's most popular products and was copied by many carriers in the individual market. Health policies that cover catastrophic care may still be sold to individuals up to age 30—but buyers are likely to be subject to an annual fine for nonconforming coverage.Which suggests, says Schramm, a simple, workable plan;
Suppose the federal government simply provided everyone under the age of 26 with a voucher to buy simple primary care/catastrophic plans that many companies could provide tomorrow. The number of uninsured would be greatly reduced at a fraction of the cost of covering them under ObamaCare.