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University of Minnesota research finds ACA insurance expansions reduce health care spending burdens for young adults

A new study published today in the August issue of the journal Health Affairs by Ezra Golberstein, Ph.D., professor in the Division of Health Policy and Management at the University of Minnesota School of Public Health, in collaboration with Susan Busch, Ph.D., of Yale University and Ellen Meara, Ph.D., of Dartmouth College, found the Affordable Care Act’s (ACA) provision allowing young adults to stay on their parents’ insurance plans until they turn 26, was associated with significant reductions in the likelihood that young adults had to pay high out-of-pocket costs for health care.

Health Talk spoke to Golberstein to learn more about this study.

Health Talk: What is the “dependent coverage expansion,” and how does it fit with the rest of the ACA?

Ezra Golberstein: The ACA has many provisions to expand insurance coverage. The dependent coverage expansion was the first major provision of the ACA to go into effect, and it allowed young adults to stay on their parents’ private insurance plans as dependents until they turned 26. We know from recent research that this one component of the ACA led to large numbers of young adults gaining insurance coverage – some estimates show that more than three million young adults gained coverage as a result of the dependent coverage provision.

HT: What did you and your colleagues try to figure out?

EG: We looked at nationally-representative data that included detailed information on how much people paid out-of-pocket for health care, which excludes premiums. We looked at trends in high out-of-pocket spending before and after the Dependent Coverage expansion went into effect, and we compared the young adults who gained coverage over this period with slightly older adults who were not directly affected by the coverage expansion. We found that the likelihood that young adults spent more than $500 in out-of-pocket costs in a year fell by 29 percent and that the likelihood of spending more than $1,500 in a year fell by 57 percent, compared to rates that existed before the law went into effect.

HT: Why is that important?

EG: When most people think about the benefits of health insurance, they tend to think about how it helps improve access to health care, and how it possibly even makes people healthier as a result. It is easy to forget that the fundamental reason why health insurance exists is to prevent people from facing unexpected and catastrophic costs if they experience an illness or injury that is very expensive to treat. So a key outcome of assessing any insurance expansions, including the ACA, is whether people are being protected from the risk of high health care spending. We are seeing evidence that this one specific insurance expansion component of the ACA is having a meaningful effect on reducing the risk of high health care spending.

HT: What are your next steps in this line of research? What else do you want to learn?

EG: There is so much to do when it comes to understanding the effects of the ACA. Even just focusing on this one specific coverage provision, we are still in the process of understanding how it affected patterns of health care use. And beyond that, there are the rest of the big ACA provisions that aim to expand coverage, like the Medicaid expansions and the insurance exchanges. We expect that it will be several years before we have enough data to have a good sense of how the ACA is affecting access to care and financial protection against catastrophic medical costs.

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