Young Adults and The Insurance Crisis

Uninsured Young Adults: A National Epidemic

Almost every item a person owns can be covered by an insurance policy. The peace of mind gained from the policy is almost worth more than the cost of the premium itself. For many items this peace of mind is mandated by the law. Your vehicle must be insured, as well as the contents of your apartment. Ironically, you are not guaranteed this piece of mind for your individual person. The number of uninsured young adults in this country has reached the staggering number of 13 million.

Adults between the ages of 19-29 are generally in good health, but 13% of men and 17% of women suffer from at least one chronic medical condition such as asthma or arthritis. Mental illness is another health concern faced by young people. Forty-four million individuals are affected by mental illness in any given year. These are all conditions which require medication and medical visits. Even currently healthy young adults are well on their way to medical problems with high rates of obesity and smoking.

When an issue affects 13 million people it is imperative to inquire as to why. Why are so many young adults uninsured? According to Time Magazine young adults are less likely to be offered coverage by their employer, do not gross enough income to pay the premiums, and don’t believe it is a necessity if they are in good health.

With cost being one of the main issues preventing young adults from being insured it’s relevant to investigate why costs are so unattainable for the 19-29 set. An article on MSNBC identified several key factors affecting cost. Malpractice insurance rates have soared as physicians become more concerned with being sued. Administrative costs drive up healthcare costs, too. One-third of all healthcare costs are administrative. Females pay higher premiums as they are more likely to seek medical attention, and lastly, insurance companies would rather pay to treat a problem than to prevent one. Most policies do not offer preventative care, and curing a disease is generally more expensive that preventing one.

How do young adults cope? With an emerging trend of do-it-yourself healthcare. Young adults frequently rely on the internet for medical advice, stretch their existing supplies of medication by splitting pills, and using leftover medication from friends. Young adults have also been know to set their own broke bones, and rely on herbal remedies.

Options exist, however, for young adults who are interested in obtaining health coverage. Catastrophic insurance plans are designed for those who are able to afford routine medical care, and offer low monthly premiums in exchange for a high deductible. Short-term policies are purchased for their namesake and have strict qualifying policies. They often reject individuals with preexisting conditions. The two most popular types of policy are the PPO (Preferred Provider Organization), and the HMO (Health Maintenance Organization). A PPO offers full coverage for any service received by a participating provider, and an HMO offers low premiums but places strict restrictions on which providers can be seen. An additional option is a “Young Invincible” plan which is a type of catastrophic policy with age restrictions, no one older than 25, low premiums and high deductibles in range of $6000.

Cost remains a factor, however, with the average policy costing approximately $400 a month. I received a quote from a health insurance quote comparison site for a non-smoking, 27 year old female and the results were astonishing. I was offered seven plans which ranged in price from $158-$921 a month. Four of the plans were for the self-employed only, and four offered prescription coverage. Two of the plans offered no option for medical visits, and the remaining five required a co-pay. With results like these it’s no surprise that young people aren’t rushing to get insured.

Luckily, alternatives and ways to lower costs are plentiful. Medical bill sharing groups are gaining popularity with approximately 100,000 Americans involved. The system operates on an income-based fee scale. Families in the network pay monthly dues, and reap the benefits when medical costs arise. You can also participate in financial assistance plans through your hospital, and prescription memberships offered by many pharmacies. The government is also available to assist with federal programs such as Medicaid, and many state-based assistance projects. If you previously had health insurance through your employer and lost it there is an option available known as COBRA. While this does provide coverage, it is not an ideal plan. The policy expires after 18 months and the cost is extremely high. You must pay 100% of the monthly premium in addition to a 2% administrative cost.

If you decide you would like to be insured it is imperative that you shop around. There are several things to consider prior to committing to a policy. Consider which type of plan is best for you and all the costs associated with it. Be advised that monthly premiums are not the only cost involved. You must also be aware of deductibles, out of pocket expenses, co-pays, co-insurance, and stop-loss. These terms will be described in further detail in the “Resources” section of the article.

You should ask yourself some important questions before purchasing a policy. These questions include:

• How much can I afford to pay each month for coverage?

• How often do I go to the doctor?

• Will I be able to automatically renew my policy at the end of the term?

• What are the premiums and under what circumstances will they increase?

The decision to purchase health insurance is not one that should be taken lightly. Weigh all of the pros and cons before making your final decision.

Resources:

Useful definitions for young adults considering insurance.

Definitions:

• Premium- Fee paid for medical benefits for a defined period.

• Deductible- The amount of money the insured must pay before policy payments begin.

• Copay- The amount of money the insured pays at the time of service.

• Coinsurance- A form of medical cost sharing in which the insured pays a percentage of medical expenses after the deductible has been met.

• Stop-Loss Coverage- A form of reinsurance for self-insured employers that limits the

amount the employers will have to pay for each person’s health care (individual limit) or

for the total expenses of the employer (group limit).