Washington – Students will be among the first to feel the effects of health care reform legislation after President Obama signs the final pieces into law this morning.
By the end of September, young adults will be eligible to stay on their parents’ health insurance plans until their 26th birthday. But along with the new benefit comes a legal obligation that everyone carry insurance, including healthy college students and recent graduates. Those who do not comply will eventually face fines as high as $695 or 2.5 percent of their income.
Many students supported the broad concept of universal health coverage and rallied on behalf of the bill. Fewer fully appreciate the real life consequences the bill will have as it becomes law.
“This is a positive thing for this age range in general … because that’s a population that’s not always insured,” Kim LaPean, a spokesperson for UC Berkeley’s University Health Services. “It’s absolutely great.”
The insurance reforms hold particular bearing for college students. Currently, an estimated one in five has no insurance. A study by the Centers for Disease Control in 2008 found that 18-24 year olds were the least likely to carry health insurance, with nearly one in three having no coverage. Those between 19 and 29 are the nation’s fastest growing group without insurance, according to a study by the Commonwealth Fund, a nonpartisan organization that focuses on health care.
Starting in 2014, even healthy college graduates with no jobs or money will be required to find policies, the cheapest of which cost roughly $1,000 a year. The penalties for those who do not carry insurance will be phased in, starting with penalties of $95 or 1 percent of income, whichever is greater. In 2015 the penalty goes to $325 or 2 percent of income, and $695 or 2.5 percent after that.
People under 30 will have the option to purchase a cheaper plan that only covers medical catastrophes.
Many young adults forgo insurance because they are typically healthier – and earn less money – than the general population. The bad economy has made it even more difficult for those who want it.
No matter what an individual’s financial situation, the new law will make health insurance, like car insurance, an obligation regardless of their risk. The Obama administration says this will bring down the cost – in part because of the flood of new young customers – and make insurance more affordable for everyone.
“There’s this myth out there that … they don’t want it because they [feel] invincible,” said Larry McNeely II, a health care advocate for U.S. PIRG in Washington. “No, the reason they don’t have health coverage is because they can’t afford it.”
The University of California system requires students to purchase a school-run insurance plan if they aren’t covered by their families. Recent graduates, however, must fend for themselves. Their most likely source of coverage is through an employer, but the weak job market means this isn’t always possible. Even those who find jobs after graduating may not be covered, as fewer jobs are offering medical benefits
Unless they decide to purchase their own insurance, recent grads often live without it. One in three graduates was uninsured at some point in their first year after college in 2007, according to the Commonwealth Fund study.
Extensive subsidies will be available to those who cannot afford to purchase insurance. Individuals earning less than 400 percent of the federal poverty level, which amounts to $43,320 annually, are promised a subsidy to help pay for insurance.
In addition, millions of young adults are expected to remain on their parents’ insurance policies. To prevent students or recent grads from feeling punished by the new mandate, the expansion of parents’ coverage will act as a safety net for students and recent grads who might otherwise have a hard time obtaining affordable insurance after graduation.
Requirements vary by state and policy, but most adults are no longer eligible for their parents’ plan by age 22, and some are cut off as early as 18. The new law extends their eligibility until age 26.
While most elements of the new legislation, such as the mandate to purchase insurance, won’t take effect until 2014, this provision will be in place within six months.
Additionally, the bill could have important long term benefits for young Americans. Families would end up spending nearly half of their annual income on health insurance by 2016 if nothing is done to reform the system, according to recent study by New America Foundation.
The legislation also stipulates that people younger than 30 will have the option of purchasing a “catastrophic” plan with lower premiums.
Health insurance isn’t cheap even for a young, healthy person. For a 21-year-old female with no medical complications, Kaiser offers a $126 a month HMO plan – $1512 a year – with a $1,500 deductible and $30 co-pay for visits to a doctor or specialist. Kaiser also offers a plan without a deductible, which costs $237 monthly, or $2844 a year. Blue Shield offers a $79 monthly PPO plan – $948 a year – with a $2,900 deductible and $40 co-pays for visits to a doctor or specialist.
The legislation to be signed today at a Northern Virginia college also contains changes to the student loan program having nothing to do with health care which will affect millions of students. Under the new law, the federal government will take over the student loan program from private lenders and limit payments to no more than 10 percent of a graduate’s disposable income.
The California News Service is a journalism project of the University of California Washington Center and the UC Berkeley Graduate School of Journalism. They can be reached at firstname.lastname@example.org.