Feds target young adults for health insurance coverage outreach

Federal health officials said Tuesday that they plan to step up their efforts to get uninsured young adults to sign up for health coverage on the Affordable Care Act exchanges, which many avoid doing due to cost and because they think they don't need insurance.

The Center for Medicare and Medicaid Services plans to target consumers aged 18 to 34 in ways officials hope will better reach younger people and resonate with them. CMS handles enrollment for the 38 states where residents use the federal Healthcare.gov exchange because their states don't run their own consumer health exchanges.

So young adults will be targeted more through email rather than mail and at times near deadlines when they are more likely to pay attention.

"We’re at a time when there’s rapid change that will lead to better health care for everyone," Department of Health and Human Services Secretary Sylvia Burwell said in a call with reporters.

Making that coverage more affordable — and attractive — to young adults, however, requires a few changes, Burwell acknowledged.

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Earlier this month, CMS announced that it was strengthening what's known as the "risk pool" — the ratio  of sick and healthy people covered — by reducing the number of hardship exemptions from the penalty for not having insurance. This penalty is $695 per adult and $347.50 per child up to a maximum of $2,085.

Nearly 13 million people enrolled in ACA plans for 2016

The agency said it would work to curb the use of special enrollment periods and short-term plans that insurers have complained some sick people take advantage of to get treatment and then drop coverage. Consumers' prescription drug usage will also be factored into risk calculations.

Young people can stay on Medicaid or the Children's Health Insurance Program until they turn 19 or on their parents' insurance until they turn 26, so CMS plans to target them as them age off these plans. Census data for 2014 show a nearly seven percentage point increase in uninsured rates at age 19, and an almost four percentage point increase at age 26. CMS said in a statement that it is "committed to flattening these cliffs."

For the first time this fall, CMS plans to target people who paid the penalty for not having health insurance this year — or claimed a exemption from it for 2015. Young adults are overrepresented among those who paid the fee, CMS said/

"We’ve gotten a lot better at reaching out to young consumers," says Joshua Peck, CMS' chief marketing officer. "We don’t think we’ve seen the full effect of the penalty."

Christen Young, principal deputy director for CMS' Center for Consumer Information and Insurance Oversight, notes that premiums for 2016 increased just 8% on average, despite media reports about insurers' rate increase proposals that make people think they are far higher.

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Tampa-based insurance agent David Taylor says he insures many young adults and faces a similar hurdle.

"What I find is that it's purely an education of the client that it's not going to be as expensive as they think," says Taylor. "Many hear the inflammatory news about high costs and never even look into it."

Erin Hemlin, national director of training and consumer education at the millennial research and advocacy organization Young Invincibles, says her group has seen the law have a "tremendous impact" on young adults, who made up nearly half of the newly insured in 2014. The rate of the uninsured 18-34 population dropped more than it did for older Americans, she notes.

Dallas-based insurance agent Ryan Holloway says price and the challenge of finding plans that cover their physicians and hospitals has discouraged many young adults in Texas.

Before the ACA, Holloway says consumers in their 20s in his state could get "really good policies" on a national preferred provider (PPO) network for $100 to $200 "depending on how good they wanted their benefits to be." Now he says policies are $100 to $200 more expensive and tend to be health maintenance organization (HMO) plans that have far smaller provider networks.

AS CMS regularly notes, about 80% of those who buy plans on the federal exchange are eligible for subsidies that reduce the premiums and often the cost sharing required as well. Young says that before the ACA it was nearly impossible to change plans and consumers had to fill out "stacks of paperwork" to be approved for coverage due to medical underwriting. This process allowed insurers to charge older and sicker people far more for coverage or to refuse to cover them at all if they had preexisting conditions.

The law now prohibits insurers from discriminating against consumers on the basis of costly illnesses.

In Pennsylvania and New Jersey, those with an annual income of less than $31,000 a year don't have to pay a penalty for not having ACA plans because the premiums would be more than 8% of their income, says Robert Ziff, president of Avanti Insurance in Morrisville, Penn.

Ziff estimates only half of those aging out of their parents' plans will buy a qualified plan and that many buy a limited medical plan, which is more affordable because it excludes some of the "essential benefits" that many young people think they don't need, such as maternity, mammograms and prescription coverage. He believes that if the ACA allowed plans that don't include all 10 of these benefits, "enrollment would be higher."