Health insurance is purchased for actual physical need or simply for peace of mind. If you’re already ill, or expect to have health issues, your need for health coverage is clear. If you aren’t ill and don’t expect to have health needs in the near future, health insurance can seem like an unnecessary expense.
Most young adults in the United States find themselves in the second category. Generally healthy, with no expectation of health problems in the near future, most don’t see the need for insurance. This group has come to be called the “young invincibles,” based on their age and their often-cavalier attitude toward the possibility of illness and injury.
Young Invincibles’ Attitude Toward Health Insurance
Americans between the ages of 18 – 29 are considered young adults. This age group has a low participation in health insurance, and this is partly understandable. In actuality, this demographic is the least likely to use health insurance coverage, unless they are involved in high-risk activities. This is also why they are a very valuable market to the health insurance industry.
However, life does happen, and even young people get sick and injured. Despite the widespread perception that young adults see no need for insurance, a Kaiser poll in June 2013 found that two-thirds of those under 30 worry about not being able to pay medical bills in the event of a serious illness or accident.
The same Kaiser poll found that more than 70% of young invincibles feel it is very important to have insurance, but their primary concern is the cost of insurance. Unless young people have a job-based health insurance plan, they are likely to struggle to afford a monthly insurance premium, and are likely to choose to go without coverage. Even when young adults have job-based health insurance, it still may be difficult to afford insurance premiums. The Affordable Care Act (ACA) addresses this by offering financial assistance to Americans with certain income levels, as well as by offering lower-premium, high-deductible “catastrophic” coverage to young adults.
Getting Young Invincibles Covered Under the ACA
Healthy young adults are an important demographic to the health insurance industry because, in general, they have a lower risk of payout for medical needs than other Americans. They balance out the insurance companies’ financial risk from older, sicker plan participants. However, if they opt out of coverage, the financial risk is higher for the companies and the price of insurance goes up for everyone. The phenomenon where primarily sick people sign up for insurance, driving up the price, is called adverse selection.
In the fall of 2013, the Harvard Institute of Politics reported that less than one-third of uninsured young adults planned to buy a policy through the ACA. The government and insurance industry have done a lot to remind young adults that health insurance coverage is important, even for healthy young people.
The ACA has a mandate that all adults get insurance or face a tax penalty. This applies to all Americans, including young adults. In addition to the mandate, the government wrote on Healthcare.gov about the importance of health insurance to young adults. By pointing out the high cost of even a short hospital stay or a broken leg, the site brought the reality of health care costs to light for young people.
Whitehouse.gov also started a “Get Covered” campaign aimed at young adults, educating them through social media, videos, and blog posts and encouraging them to get coverage through the Marketplace. These campaigns were fairly successful and over 3 million Americans under the age of 29 purchased health insurance in the Marketplace during the 2013-14 enrollment period.
Healthy young adults rarely need the coverage and prevention benefits that health insurance provides. As a consequence, they often forgo the cost, earning them the nickname “the young invincibles.” However, even healthy young people can be injured or fall ill. As a result they need health insurance. The government and insurance industry, interested in keeping costs down, has several campaigns encouraging young adults to purchase health insurance coverage. Time will tell whether enough young adults participate in the health insurance Marketplace to avoid the effects of adverse selection.