Millennials’ enrollment pushes ACA’s success to new heights

Health Insurance

March 18, 2016

The Affordable Care Act (ACA) has given millions of Americans access to high-quality health insurance. Enrollment numbers for this latest Open Enrollment Period (OEP) rank as the highest yet, with an estimated 11.6 million people having signed up for coverage as of Jan. 23, 2016. And while past years’ enrollment was affected by technical problems, this most recent effort emerged with few issues overall.

But while all Americans are encouraged to enroll, not everyone is equally valued. The ACA’s major insurance carriers prefer younger (18-34 years old), healthier enrollees. These millennials — or Young Invincibles (YIs) — generally experience fewer, expensive health-related problems, compared to older and sicker consumers. This, in turn, balances out the policies’ risk pool, reducing all members’ premiums and other costs.

Younger, healthier enrollees drawn to Obamacare

The Centers for Medicare and Medicaid Services (CMS) noted that by Dec. 15, 2015, 2.1 million YIs had enrolled in ACA-compliant plans, compared to 2015’s 1.1 million. Beyond the Obama administration’s efforts in attracting millennials, this will benefit the ACA’s future success. Attracting younger, healthier people has long been a big concern, as this age group is more likely to be uninsured.

Prior to the 2016 OEP’s start, the Dept. of Health and Human Services (HHS), which oversees the CMS, found that about half of those uninsured were millennials. As such, lowering their uninsured rates was a major goal. Sylvia Burwell, the HHS Secretary, stated that they wanted to sign up a quarter of those 10.5 million uninsured Americans who qualified for coverage.

Research shows that millennials are less likely to be covered by employer insurance. And, unless they’re disabled, they typically don’t qualify for Medicare and Medicaid. But the healthcare law’s provision allowing people to remain on their parents’ policies until the age of 26 has been a very powerful tool. Before the ACA’s establishment, these individuals’ typical coverage option was an employer-sponsored family policy; these ended at 18 years (except for full-time students).

But even with Obamacare, there haven’t been huge numbers of younger, healthier consumers enrolling. While these consumers may have financial problems, they still face IRS-imposed penalties if uninsured after the OEP’s Jan. 31, 2016, deadline. Consumers are responsible for the greater of: $695 per adult and $347.50 per child, for a maximum of $2,085 per family, compared to 2015’s $325 and $162.50, respectively; or, 2.5 percent of your income above the tax filing threshold, compared to 2015’s 2 percent.

This age group’s reputation as “Young Invincibles” also contributes to lower enrollment rates, as they don’t think they’ll experience any health issues. Nevertheless, the major insurance carriers crave as many millennial enrollees as possible. But with 2.1 million YIs having purchased coverage by Dec. 15, 2015, carriers should be more optimistic about the ACA’s long-term stability, with rising profits and falling costs.

For those millennials still seeking coverage, the best option would be to qualify for their own Special Enrollment Period (SEP), an extension period offered year-round. Eligible members must experience a specific life change, known as a Qualifying Life Events (QLE), such as divorce or childbirth. Previously, the government offered official SEPs, although there won’t be one in 2016. The insurance industry feels that these extensions make it harder to set prices, as plans may not be available by the time consumers enroll.

However, despite the OEP having passed, some state-run exchanges, including California and Maryland,  have extended enrollment extensions. Specifically, consumers in these states will have until Feb. 6 to purchase coverage.