1. Effects of Federal Policy to Insure Young Adults:
Evidence from the 2010 ACA’s Dependent
Coverage Mandate
Yaa Akosa Antwi
IUPUI Department of Economics
Asako Moriya
IU School of Public and Environmental Affairs(SPEA)
Kosali Simon
IU School of Public and Environmental Affairs(SPEA)
NBER
September 7, 2012
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2. Motivation
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3. There is something different about young
There is something different about young adults..
adults..
US Facebook Users, by Age, 2010
55‐65 7%
Age in Years
45‐54 13%
35‐44 18%
26‐34 23%
18‐25 29%
13‐17 10%
0% 5% 10% 15% 20% 25% 30% 35%
Source: gold.insidenetwork.com/facebook
2
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4. Snapshot of Uninsurance in the US (2008)
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5. Reasons for Lack of Health Insurance
Aging out of parental or government policies (Anderson,
Dobkin and Gross, 2012)
Lack of human capital necessary for jobs that provide health
insurance(Levy, 2007)
Adverse selection (Monhiet et al 2011, Levine et. al 2011)
Actuarially unfair policies
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6. Implications of High Uninsured Rate
Uninsured young adults are 3x more likely to delay or forgo
medical care (Nicolson et. al., 2009, Callahan and Cooper
2005)
Significantly less likely to have a usual source of care or fill
prescriptions (Nicolson et. al., 2009, Callahan and Cooper
2005)
2x more likely to have medical debt or trouble paying medical
bill (Nicholson et. al 2009)
More likely overuse expensive emergency room care (Anderson
et al 2012)
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7. State Government Intervention
1995: Utah first state to extend dependent coverage
2003-2009, most states passed some measure
31 states had passed a law before the federal law
Several restrictions
1 Self insured are exempt
2 IRS rules not revised for tax deduction rules
3 May have allowed separate premiums
4 Age, student, marital status, residency restrictions
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8. Effect of State Laws
Mixed evidence on the impact of state laws
1 Monheit et al (2011)
Small increases in dependent coverage
1.52 pp for all young adults
3.84 pp for those ages 1925 residing with parents
Increases were largely offset by declines in own name ESI
No significant impact on young adult uninsured rates
2 Levine et. al (2011)
3 pp reduction in rates of uninsurance among those eligible.
This translates to an 11% reduction of uninsurance among
targeted young adults.
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9. Federal Expansion
ACA enacted March 2010; dependent coverage provision
effective first renewal date after September 23rd 2010
Requires insurers to offer coverage to older dependent children
on same terms as for younger dependent children
Many insurers acted sooner than required date
Generally positively received provision in ACA
Closely watched as politically meaningful provision
Applies to critical voting population
Other major insurance provisions of ACA, 2014
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10. Early Evidence of ACA Dependent
Coverage
Sommers and Kronick(2011)
Use CPS data from 2005-2010
Compare 19-25 year-olds with 26-34 year-olds
Control for age-group and survey year
Find 2.9 ppt increase in insurance coverage
4.3 ppt increase in dependent coverage through parents
2.5 ppt drop in own policy
No change in public insurance
Cantor et. al (2012)
Use CPS data from 2004 to 2010
DD methodology with detailed controls for confounding factor
3.5 ppt drop in uninsurance (10% drop)
716,000 young adults gained insurance
NHIS estimates
Compare health insurance trends for 19-25 and 26-35 year olds
Estimates from September 2010 to June 2011
Insurance coverage increased from 64% to 73% (2.1 million )
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11. Research Question and Contributions
Evaluate the effect of the federal expansion on
1 Take-up and substitution of coverage (private to private or
public to private)
Use longitudinal data (SIPP)
Contains point-in-time questions about insurance rather than
one year reference as in CPS
Allows evaluation of enactment and implementation effects
2 Labor Market Behavior
First paper to evaluate this
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12. Mechanisms
Federal law will have anticipatory impact
The effects will be concentrated among families with lower
marginal cost of adding dependents
Demand will be greatest among those in worse health
Parents may add health insurance– unlikely.
Parents may switch from single to family coverage– likely to
add dependents when already covering dependents
Effects should be smaller among full time students because
many already eligible
We expect to see different effects in states with and without
prior laws expanding coverage to young adults.
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13. Preview of Results
1 Decreased uninsurance among young adults (9.3 % ; 3.3 ppt)
2 Increased dependent ESI coverage (26.6% ; 6.2 ppt)
3 Substitution away from existing sources
4 Take-up concentrated in families with low marginal cost of
additional dependents
5 Smaller effect for students compared to non-students
6 Similar effect for states with and without prior laws
7 Evidence of labor market flexibility for young adults (reduced
job-lock)
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14. Data
We use the 2008 panel of the SIPP which started in
September 2008
About 50,000 households interviewed every 4 months
Contains detailed demographic information on health
insurance and labor market
Current information is from August 2008- November 2011
Base sample composed of 16-29 year olds (minus 26 year olds)
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15. Variables of Interest
1 Insurance Coverage
Any source of insurance
As a dependent on parent’s ESI policy
Non-group insurance in own name
Own ESI
Public insurance
2 Labor Market
Employed
Employed full time
Number and Log hours
Probability of having hours that vary
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16. Identification
Difference-in-difference (DID) methodology
“Treatment” group –Young adults aged 19-25
“Control” group –Those aged 15-18 and 27-29
Identifying assumption is that (conditional on observable
characteristics) the trend between treatment and control
variables would have been constant over time
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17. Percentage of Young Adults with Any
Insurance by Treatment and Control
Groups
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18. Trends Test- Data from August
2008-February 2010
Any Dependent
source coverage
Interaction of Time Trend and 0.001 0.001
a Dummy Variable for Treatment Group (0.001) (0.001)
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19. Econometric Specification
Yigst = α + γ1 Treatg + γ2 Enactt + γ3 Implementt
+γ4 (Treatg × Enactt ) + γ5 (Treatg × Implementt )
+ Xigst β + τt + ξs + igst
i = individual
g =age range
s = state
t =time
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20. Summary Statistics
All Obs. Age 16-18 Age 19-25 Age 27-29
Health Insurance Status
Any Source 0.727 0.870 0.678 0.693
Dependent Coverage 0.267 0.523 0.264 0.019
Own ESI 0.198 0.024 0.189 0.393
Own Coverage(NG) 0.028 0.256 0.127 0.129
Public 0.158 0.256 0.127 0.129
Employment Status
Employed 0.569 0.253 0.628 0.754
Unemployed 0.080 0.063 0.089 0.076
Demograhics
Age 22.22 17.02 21.96 28.01
White 0.602 0.575 0.613 0.604
Black 0.136 0.146 0.135 0.127
Hispanic 0.190 0.200 0.183 0.195
Married 0.180 0.013 0.140 0.435
Education
Student 0.419 0.885 0.361 0.084
Less than HS 0.257 0.770 0.098 0.103
HS 0.172 0.178 0.325 0.245
Some College 0.333 0.051 0.452 0.347
College 0.113 0 0.113 0.223
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21. Percentage of Young Adults Covered by
ESI as Parent’s Dependents
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22. Effect of ACA Dependent Coverage
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment -0.002 0.024*** 0.002 -0.017*** -0.011*
Effect (0.006) (0.006) (0.003) (0.005) (0.005)
Implementation 0.032*** 0.070*** -0.008*** -0.031*** -0.002
Effect (0.007) (0.007) (0.002) (0.006) (0.006)
Dep Var. Means
Treament Before 0.665 0.234 0.035 0.204 0.123
Control Before 0.781 0.280 0.023 0.208 0.0182
Note: Enactment phase: Mar-Sep, 2010; Implementation phase: Oct 2010-Nov 2011.
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23. Overview and Implications of Results
Evidence of anticipatory response to the enactment of the law
About 9.5% drop in rate of uninsurance among young adults
With base of 29.5 million young adults, roughly 938,000
gained insurance
Represents about a 51% take-up
If all gains in dependent coverage reduced uninsurance then
2.1 million would have gained insurance
About 236,000 switching from non-group insurance
About 920,000 drop own ESI
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24. Effect of Mandate using Sample with
“Excellent” Health
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment -0.002 0.029*** 0.006 -0.028*** -0.011
Effect (0.011) (0.008) (0.006) (0.009) (0.010)
Implementation 0.027*** 0.078*** -0.010* -0.046*** -0.005
Effect (0.010) (0.009) (0.005) (0.008) (0.008)
Dep Var. Means
Treament Before 0.742 0.313 0.044 0.215 0.088
Control Before 0.847 0.386 0.023 0.0190 0.146
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25. Effect of Mandate using Sample without
“Excellent” Health
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment -0.004 0.019** -0.002 -0.009 -0.011
Effect (0.009) (0.010) (0.004) (0.008) (0.009)
Implementation 0.035*** 0.067*** -0.006 -0.024** 0.001
Effect (0.013) (0.010) (0.004) (0.010) (0.009)
Dep Var. Means
Treament Before 0.633 0.199 0.030 0.198 0.142
Control Before 0.749 0.216 0.023 0.223 0.206
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26. Effect of Mandate using Sample with
Parental Information
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment 0.039*** 0.014 0.005 -0.012 0.032*
Effect (0.014) (0.009) (0.007) (0.011) (0.018)
Implementation 0.067*** 0.096*** -0.013* -0.024 0.013
Effect (0.024) (0.010) (0.007) (0.015) (0.022)
Dep Var. Means
With Parental ESI
Treament Before 0.435 0 0.031 0.104 0.215
Control Before 0.658 0 0.017 0.064 0.479
Without Parental ESI
Treament Before 0.793 0.525 0.032 0.154 0.054
Control Before 0.912 0.715 0.015 0.075 0.081
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27. States With Dependent Coverage Laws
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment -0.003 0.023*** 0.005 -0.021*** -0.013*
Effect (0.007) (0.007) (0.004) (0.007) (0.007)
Implementation 0.029** 0.069*** -0.006** -0.031*** -0.007
Effect (0.011) (0.009) (0.003) (0.007) (0.007)
Dep Var. Means
Treament Before 0.684 0.250 0.032 0.211 0.120
Control Before 0.790 0.291 0.023 0.215 0.169
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28. States without Dependent Coverage Laws
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment -0.003 0.028*** 0.002 -0.011 -0.014**
Effect (0.011) (0.009) (0.006) (0.007) (0.007)
Implementation 0.034*** 0.074*** -0.009** -0.032*** 0.002
Effect (0.008) (0.010) (0.004) (0.010) (0.011)
Dep Var. Means
Treament Before 0.633 0.207 0.040 0.193 0.128
Control Before 0.766 0.262 0.023 0.195 0.204
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29. Three implementation Periods
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Mar-Sept 2010 -0.002 0.024*** 0.002 -0.017*** -0.010*
(0.007) (0.005) (0.003) (0.005) (0.005)
Oct 2010-Feb 2011 0.025** 0.049*** -0.004 -0.022*** 0.001
(0.010) (0.007) (0.003) (0.007) (0.007)
Mar-Sept 2011 0.032*** 0.072*** -0.009*** -0.028*** -0.009
(0.009) (0.008) (0.003) (0.007) (0.006)
Oct-Nov 2011 0.026** 0.102*** -0.011** -0.057*** -0.008
(0.011) (0.014) (0.005) (0.013) (0.013)
Dep Var. Means
Treament Before 0.665 0.234 0.035 0.204 0.123
Control Before 0.781 0.280 0.023 0.208 0.0182
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30. Marginal Cost Analysis: Family vs.
Non-family Coverage
Descriptive Results
% of young adults with
dependent coverage through N
parents after the mandate
Family coverage 29.1 % 1,144
Non-family coverage 20.9 % 2,550
Regression Results
Dependent
coverage
Indicator for parents having 0.096***
family coverage before ACA (0.025)
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31. Interaction of Young Adult Mandate with
other features of ACAdefinition of
“affordability” will matter
Next slide is from:
Burkhauser, Lyons and Simon, 2011 Meaning and Measurement of
Affordable in the Affordable Care Act , NBER WP No. 17279.
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32. 32/41

33. The Effect of the ACA Dependent
Provision on Parent’s Own ESI Coverage
Parent has ESI
Enactment Effect 0.012
(Mar-Sep, 2010) (0.008)
Implementation Effect 0.007
(Oct, 2010-) (0.008)
Dep Var. Means
Treament Before 0.689
Control Before 0.666
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34. Effect of Mandate on Labor Market
Outcomes
Employed Full time # of hours Log hours Hours vary
Enactment -0.002 -0.017*** -0.800*** -0.027 0.014***
Effect (0.006) (0.006) (0.209) (0.021) (0.005)
Implementation -0.006 -0.016** -0.861*** -0.048** 0.012**
Effect (0.006) (0.006) (0.319) (0.021) (0.006)
Dep Var. Means
Treament Before 0.651 0.462 23.3 2.27 0.099
Control Before 0.524 0.353 17.8 1.73 0.080
Treatment After 0.602 0.423 20.4 2.04 0.099
Control After 0.481 0.335 16.0 1.56 0.066
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35. Overview of Mandate on Labor Market
1 No evidence of an impact on labor force participation
2 Young adults are less likely to have full time job
3 Evidence that mandate reduced the number of hours young
adults work
4 Overall evidence of labor market flexibility (reduced job lock)
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36. Robustness of Results
1 Using only young or older control group
2 Using sample without Massachusetts
3 Clustering at an aggregate level as in Cameron et.al 2008
4 Logistic regression
5 Using one post dummy
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37. DD Results using Aggregated Quarterly
Data & Wild Cluster Bootstrap-t Method
Any Dependent Own Coverage Own ESI Public
Source Coverage Nongroup
Enactment Effect 0.007 0.039** 0.001 -0.019** -0.014
p-value 0.118 0.040 0.432 0.022 0.126
Implementation Effect 0.037*** 0.092*** -0.009** -0.036*** -0.007
p-value 0.001 0.001 0.017 0.003 0.243
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38. Limitations
Early evidence–one year after implementation
Long run effect might be different
ACA 2014 could change the take-up
Among young adults who have parental ESI, 16% have income
under 133% FPL, and 37% have income 133-400% of FPL.
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39. Why Are Young Adults Not Signed Up for
Parental ESI?
Among those with parents with ESI, post August 2011
36% ESI in own name
14% public
8% individual market (own or dependent)
5% other private insurance
35% are uninsured
Comparing uninsured to those with parental ESI:
older by 0.8 years
more likely to be male
more likely to be African American or Hispanic
more likely to be unemployed
less likely to be students
less educated
more likely to report ”less than excellent health
report less household income
→ less likely to be insured in general, to have generous
parental ESI, to have close family ties?
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40. Conclusion and Next Steps
Increase in coverage not as large because increase in
dependent coverage through parent offset by drop in own
sources of coverage
Efficiency implications
Who will pay?
Is this efficient?
Will this lead to further increases in premiums for family
coverage?
Future work should explore effect of expansion on
out-of-pocket medical expenses, and healthcare utilization,
and interaction with state laws.
Effects outside health economics: impact on transition to
adulthood, intergenerational relationships
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41. Thank You
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