Why aren’t young people buying in to the ACA?
The joke goes like this: A new sales guy for a dog food company attends his first annual sales meeting with the big cheese. The CEO gets up and chews out the multitude of salespeople gathered about why their dog food is last in sales among their competitors.
“I don’t understand!” The CEO rants. “We have the highest paid marketing firm, the best advertising, the largest and highest paid sales force in the country! Why is our dog food last is sales?”
You could hear a pin drop in the room as the veteran salespeople keep their heads down, taking copious notes. After a moment, the new sales guy jumps up at the back of the room and yells, “Maybe the dogs just don’t like it.”
Among policymakers there seems to be a similar question about why the number of young people who have enrolled in health coverage under the Affordable Care Act (ACA) is so low. Well, “Maybe the young people just don’t like it.”
To find out, I interviewed some of the young bloods. I also asked these young adults for suggestions on what could be done by the government to change this situation. The results were revealing in several ways.
Enrollment falls short
By way of background, by the end of December 2013, almost a quarter of the 2.2 million people who have enrolled in health coverage in the ACA insurance marketplaces were young adults, people 18 to 34 years old.
This is the prime target population that the federal and state health exchanges need to offset the older and/or sicker, population with higher health costs that are also signing up. The health law’s individual mandate was put in place largely to make sure young adults signed up. In fairness to the Obama Administration, everyone expected this demographic to be the hardest to attract.
But a recent enrollment report showed the government lagging behind the Obama Administration’s target of 3.3 million sign-ups by the end of December 2013. Some health policy experts say they always knew young adults would wait till the last second to sign up. Also, the Administration notes that the target young adults still have an open enrollment period which was recently extended until March 31, 2014. Nevertheless, federal officials are not being exactly forthright when they say they are not concerned about the situation.
Insurers are raising concerns about what such a current demographic mix might mean for future insurance prices. Indications are that the Administration and the supporters of the ACA are indeed worried that without more young adults, health insurance premiums could sky-rocket next year.
In a Jan. 16, 2014 CNN Money article, Chris Carlson, from Oliver Wyman, an actuarial firm which helps insurers set premium prices based on their enrollee pools, predicted a rush of people at the end of March, “but they may not skew younger.” He added, “It will take a pretty big shift from what we’ve been seeing so far to get to the original assumptions, which is what insurers based their pricing on.” Worse, there is actually some gallows talk among Democrats that without greater participation by young adults soon, the ACA itself could begin to unravel.
According to the Congressional Budget Office (CBO) projections, there are about 40 percent of the potential market for the federal and state exchanges that are people 18 to 34 years old. CBO originally estimated an overall total of 7 million people would sign up for insurance by the end of 2013. Of this 7 million projection, 2.7 million were supposed to be young adults.
After the disastrous roll-out of the federal healthcare exchange in the fall of 2013, many expected an aggressive nationwide marketing effort by the government to increase the number of enrollees in the 18 to 34 year old demographic. A Department of Health and Human Services (HHS) report on enrollees was released on Jan. 13, 2014. This is the first time the Administration has given demographic data about health plan enrollees. The report states that over 50 percent of health plan enrollees are 45 or older, while only 24 percent of the 2.2 million individuals – or about 489,460 young adults – have signed up for healthcare so far. And, it’s not clear how many of all enrollees have actually paid their premiums.
Proportionality of young and old enrollees makes healthcare insurance viable. So what kinds of people are signing up for health insurance through the Affordable Care Act’s federal and state marketplaces? The HHS report reveals that three out of four are primarily older and potentially less healthy, a demographic mix that could threaten the ACA’s economic underpinnings and cause premiums to rise in the future if the pattern continues. This is why it is so crucial that young adults be recruited by the end of March 2014.
After the release of the HHS report, I surveyed about 40 young adults (ages ranging from 21 to 28 years old) from across the country. I asked why they thought young people were not signing up. They made some interesting observations.
One New Yorker observed three main reasons why young people have failed to register for healthcare under the ACA. First, “many young adults between the ages of 18 and 26 are allowed to stay on their parents health plans so they have no need to purchase additional coverage via the ACA.” Second, “the mentality of young people is working against the ACA. In other words, young people tend to have a feeling of invincibility that causes them not to see the urgency in signing up for health insurance. Because they are generally healthier and don’t give much thought to the idea of aging or possible illness or injury, they are less likely to see the need for a comprehensive healthcare plan.” The young person’s final observation was “The issue of money is a real problem. Many 18 to 34 year olds are either in school or recently graduated and have just joined the working world. Often times they are still struggling to establish themselves as financially independent and are less likely to purchase a healthcare plan that seems unnecessary, especially if they are healthy.”
Another young person from Pennsylvania observed “I believe the demographic of 18 to 34 year olds in the U.S. haven’t signed up for the new federal/state health exchanges because many get health insurance from their employment.” Also, “they are uniformed by choice or they don’t have real access to the information.”
A North Carolinian said his fellow young adults “know that the ACA exists, but they do not know how it impacts them. I think a lot of people don’t realize how they could benefit from the ACA, and even that they qualify for it. It seems overall there is a lot of uncertainty about the details of the programs. If people in this demographic learn more about what the ACA is and how they can benefit from it, they will be more inclined to join.”
From the state where the most young adults have signed up for insurance so far, a Californian said “like myself, they feel that a whole healthcare plan that includes many features/coverage that they probably (and hopefully) won’t need is too expensive for a young professional to afford and/or just not worth it.” He added “I am going to try to stay on my parent’s plan as long as possible and give them any money I can for my personal medical expenses.” However, he added “Ultimately, though, I think it is the young’s belief that they are invincible and they would rather spend their money on other things.” Then surprisingly he added “I honestly don’t think that this issue can be fixed in the foreseeable future. Maybe if I were to start a family by my late 20s/early 30s, I would think of looking at health insurance through the ACA, but that is a huge “if”. As for others in the 18 to 34 year old age range, we are not concerned with our health as much as we are with our jobs and social lives.”
A young person from New Jersey bluntly stated, “The lack of young adult enrollees is clearly the result of economic factors. Students are coming out of college with huge educational debts, delay starting a family, can’t afford a car, and can’t find a good paying job if they can find one at all. The last thing my friends are thinking about right now is health insurance – mandate or not.”
So did these students have any suggestions for the Obama Administration as to how they could more effectively get uninsured young adults to sign up for insurance? Again, some of the representative comments were as follows:
“This issue may be fixed if the government tailors its mandatory requirements for health insurance to various age groups and at-risk populations.”
“Creating awareness campaigns via advertisements targeted at this demographic would really help.”
“In order to fix these problems, the Administration should do a better job of stressing the importance of having basic healthcare coverage, even if one is completely healthy, by outlining the costs involved both on society and the individual in a medical emergency if the patient has no health insurance. This kind of ad campaign should be proliferated throughout social media sites like Facebook, Twitter, Vine and Instagram to reach the largest amount of young people.”
“The Administration could target their advertising by presenting it during young adult events (i.e. happy hours) and on college campuses.”
“The advertising could use shock value by presenting statistics on the morbidities that especially affect this demographic and provide understandable reasons for the need to be insured.”
Given the stakes, the Administration is moving forward aggressively in a two-month campaign to reach young adults and get them to sign up for insurance under the ACA. Some of the reported methodologies they will employ fit nicely with what some of the young people I surveyed told me should be done. But there is something else that troubles me.
History will note that President Obama dropped the ball on implementation of his signature domestic policy achievement. Frankly, I can’t get over the ham-handed way the roll-out of the federal healthcare exchange was handled. As focus comes from the top, the President did not seem to be operationally focused. Why weren’t the senior people around the President working overtime to be sure the roll-out of the ACA wasn’t more effective? In an administration lauded for being the first to capture the potential of social media in rallying young people, why was the initial outreach to young adults on the ACA so poor? Young adults may have gone out for President Obama at election time but they certainly don’t seem to be buying his idea on health insurance.
Getting sufficient numbers of young adults to sign up for health insurance by the end of March 2014 – to avoid a precipitous rise in premiums for everyone else – is problematic at best. To pull this out of the ditch operationally and politically, I think the Administration needs to enroll at least another million and a half young people by the end of March 2014. Things might change with significant government-funded advertising, aggressive outreach, and an eventual strengthening of the individual mandate. However, the Obama Administration must consider that, for right now, “Maybe the young people just don’t like it.”
Robert Betz, Ph.D., is President of Robert Betz Associates, Inc. (RBA), a federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy.For more information about RBA, visit www.robertbetz.com.