Designing a Young Adult Plan: The Massachusetts Model
To design this plan, it is useful to set the stage by examining a similar idea implemented in Massachusetts. In 2006, the state of Massachusetts adopted two coverage opportunities for young adults between 19-‐26 years of age.44 These opportunities were:
1) Extend eligibility for dependent coverage from 19 to 26 years of age.
2) Establish and offer a YA plan through the state’s health insurance exchange for those
who have no access to employer based coverage.45
As a result of these reforms, uninsured rates for the 19-‐to-‐26 age range dropped from 21% to 8% in two years. Furthermore, an estimated 6% of the total 13% drop in the uninsured rate was due to the Young Adult Plan alone.46 Massachusetts has since ended the YA Plan in exchange for the ACA’s Catastrophic Plan, which initially reversed the trend with the uninsured rate increasing to 9.2% in 2009. Since then, however, the uninsured rate has dropped to 6.2% in 2014.47
Young adult plans are more suitable for California’s younger population because they would offer financial protection against catastrophic circumstances, but would have lower premiums than a traditional plan. Young adults are a “healthier-‐than-‐average” population with lower health utilization rates than other age groups.48 As Figure 2 shows, 25%-‐30% of individuals ages 19-‐to-‐30 have no health expenses. This incentivizes insurance companies to offer YA a plan with lower premiums, cheaper co-‐pays for a limited number of visits, and protection from financial ruin. As might be expected, as a component of its initial reform, Massachusetts was able to offer the YA Plan at a lower cost than the regular metal tier plans. Table 2 shows the cost of the various plans offered.
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