With the Supreme Court set to rule on the Affordable Care Act, the entire law could well be nullified if the individual mandate is ruled both unconstitutional and inseparable. With it would go a provision that allows young adults to stay on their parents’ health insurance plans until they turn 26, providing a safety net for the young and unemployed in an adverse hiring market.
How much would it cost young Americans to move from their parents’ employer-based plans to the individual market? By NerdWallet’s estimates, the nationwide cost difference between the average cost to add a dependent to an employer-based plan, and the average individual market premium for 18 to 24-year-olds, ranges from $539 to $773. But certain states and cohorts would pay far more, in one case facing $2,000 more in health care premiums on the individual market.
Employer-based plans cover the majority of Americans: 55% of the insured receive health care through work. What’s more, the employer covers on average 2/3 of the bill. For youth under 26, losing the Obamacare provision would deliver a triple blow. Adding a dependent to an employer-based family plan is relatively inexpensive, but purchasing single coverage and going through individual market both send costs spiraling. Out-of-work youths would also have to pay the premium themselves, rather than share the cost with an employer.
NerdWallet analyzed employer-based health premiums as well as premiums purchased on the individual market and found the cost differences to be significant, with the potential to price out-of-work youth out of the health insurance market.
Among the key findings:
- Youth aged 18 to 24 nationwide would pay an average of $656 more on the individual market.
- Women fared the worst: females in that cohort would pay $773 more.
- Rhode Islanders would face the worst losses. Because of high premiums on the individual market, 18 to 24-year-olds as a whole would pay over $1,800 more than under Obamacare.
- Rhode Island women were the worst off of any state and cohort, paying over $2,000 more.
- 18 to 24-year-olds overall would pay more than $1,000 extra every year in:
- Connecticut, Montana, Nevada, New Hampshire, Rhode Island and Virginia
- Women of that age would pay more than $1,000 extra in those states, as well as:
- Georgia, Oklahoma, Pennsylvania, South Carolina and Tennessee.
Differences in individual market premiums largely drove the inter-state disparities: while the cost to the worker of adding a child may be slightly higher, residents of some states paid far more in individual market premiums.
Caveat: The study compares the average employee contribution to add a dependent and the average premium on the individual market for 18 to 24-year-olds. Certain plans (PPO’s, for example) would cost more than the average, while high-deductible plans would cost less. A 2009 study of individual market health savings account/high deductible plans found that 21% of enrollees were under 19, and an additional 11% were between 20 and 29. The cost to buy on the individual market is also highly dependent on age and gender; the ACA prohibits gender- or age-based pricing when adding a dependent.