Why Insuring Young Adults Until They Turn 26 Is Good for the Rest of Us

Good news from the White House. When the health-insurance overhaul passed Congress last month, it stipulated that instead of getting booted from their parents' health-care plans at the tender age of 19 or 22, qualifying young adults would now remain covered until 26. College students cheered; parents breathed a sigh of relief.

The only problem? The new provision wasn't scheduled to kick in until September 23—meaning that millions of graduating millennials might have lost their insurance in the interim.

Now, according White House health-reform chief Nancy-Ann DeParle, that's much less likely to happen. On April 19, Health and Human Services Secretary Kathleen Sebelius called on leading insurance companies to begin covering young adults voluntarily before September 23; since then, 65 insurance companies have agreed to do just that.

On the surface, this announcement—Hooray! A bunch of entitled young brats will no longer be forced to endure a few months without health insurance!—might not seem like such a big deal. But it is. First off, it's good for the insurance companies, who will save on the unnecessary administrative costs of removing a young adult from the rolls and then reenrolling them a few months later. And it's good for the rest of us, who probably would've wound up paying higher premiums to cover these new expenses.

But most of all, it's good for young adults themselves. It's not that going a few months without insurance would be the worst thing in the world; most 23-year-olds are hale and healthy and won't be getting debilitatingly sick between now and September. It's that, at this point, millennials need all the long-term economic help they can get, and removing the risks associated with finding and keeping health insurance—completely, without gaps—is one of the best ways the government can provide it. As Don Peck recently reported in The Atlantic, "a whole generation of young adults is likely to see its life chances permanently diminished by this recession."

Lisa Kahn, an economist at Yale, has studied the impact of recessions on the lifetime earnings of young workers. In one recent study, she followed the career paths of white men who graduated from college between 1979 and 1989. She found that, all else equal, for every one-percentage-point increase in the national unemployment rate, the starting income of new graduates fell by as much as 7 percent; the unluckiest graduates of the decade, who emerged into the teeth of the 1981–82 recession, made roughly 25 percent less in their first year than graduates who stepped into boom times...Five, 10, 15 years after graduation, after untold promotions and career changes spanning booms and busts, the unlucky graduates never closed the gap. Seventeen years after graduation, those who had entered the workforce during inhospitable times were still earning 10 percent less on average than those who had emerged into a more bountiful climate.

By ensuring that millions of young Americans won't have to worry about finding health coverage for their first seven years out of high school—or their first three years out of college—the Obama administration is freeing them up to focus on finding steady, satisfying, lasting employment instead. (About half of all 19-to-29-year-olds go without insurance at some point.) This means less settling and less stagnation—and more risk-taking, more entrepreneurship, more mobility, more competition. At a time when job offers to graduating seniors have declined 28 percent over the past two years—and fewer and fewer companies are offering health insurance right out of the gate—any policy that removes the roadblocks that would otherwise force many young adults onto a compromised career path and instead allows them to pursue their fullest economic potential is a boon not only for the millennial generation, but for the country as a whole.  

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