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January 2010Uninsured Young Adults: Who They Are and How They Might Fare Under Health Reform

By Karyn Schwartz and Tanya Schwartz

Executive Summary

Young adults, age 19-29, have the highest uninsured rate of any age group in the United States. Thisage group comprises 30% of the overall uninsured population, making them a key target of healthreform efforts. Legislation passed in the House of Representatives and in the Senate includes variousmechanisms for expanding health coverage to the uninsured. This brief highlights the current healthcoverage status of young adults, current approaches to expand coverage to this population, and howthey might be affected by national health reform.

Young adults represent nearly one-third of the uninsured population.

Half of these uninsuredyoung adults work full-time and 18% work part-time. However, many uninsured young adults work for small employers that are less likely to offer health coverage to employees. Although the majorityof young adults are employed, many of them work in low-wage positions. More than half of uninsured young adults have family incomes below 150% of the federal poverty level (FPL).Additionally, only 6% of uninsured young adults have incomes at or above 400% FPL.

Although young adults are largely healthy, access to routine care and ongoing care forchronic conditions is crucial to sustaining and improving their health status.

Receivingpreventive services and health education during early adulthood can help reduce health problemslater on in life. Additionally, 14% of uninsured young adults have a chronic health condition,which typically requires ongoing care. Despite the need for routine and ongoing care, over half of uninsured young adults have no usual source of care and about one-quarter could not afford aprescription drug they needed in the past year.

Although there has not been federal action to reduce the number of uninsured youngadults, some states and private insurers have made efforts to expand coverage to moreyoung adults.

Twenty-five states have increased the age that children can be covered undertheir parent’s private health plan in the group insurance market. Additionally, states and privatehealth plans have developed insurance plans targeted at young adults that typically have lowerpremiums but contain less comprehensive benefits.

National health reform legislation includes various strategies to expand coverage to uninsuredyoung adults.

Health reform bills being debated in Congress would require most individuals topurchase health insurance. In order to meet this requirement, the legislation builds upon the currenthealth insurance system to create new avenues for young adults to obtain coverage. The strategiesinclude imposing new requirements on employers that do not offer coverage and allowing dependentsto remain on a parent’s health plan until age 26 or 27. Medicaid eligibility would also be expanded to133% FPL or 150% FPL, which would enable over half of currently uninsured young adults to qualifyfor Medicaid. Individuals and small employers would be able to purchase coverage through a healthinsurance Exchange and premium subsidies would be provided for individuals with incomes up to400% FPL to make coverage more affordable.

Uninsured Young Adults: Who They Are and How They Might Fare Under Health Reform

Young adults, age 19-29, have the highest uninsured rate of any age group in the United States.

This group comprises 30% of the overall uninsured population, making them a key target of health reform efforts to reduce the number of uninsured. Their high uninsured rate is due in partto the fact that coverage received through a parent’s private plan or through a public programtypically terminates when an individual turns 19 years old. In addition, many young adults haveentry-level, low-wage, and temporary jobs which make it more difficult for them to obtaincoverage through their employer or afford coverage in the individual market. This brief examines how young adults obtain health coverage today, current approaches that are being usedto expand coverage to them, and then goes on to discuss how national health reform may affectthis population.

I. Health Coverage of Young AdultsYoung adults have the highestuninsured rate of any age group in thecountry.

Almost one-third (30%) of young adults are uninsured, compared to17% of the entire non-elderlypopulation. The uninsured rate foryoung adults is almost twice as high asthe uninsured rate for adults age 30-64(Figure 1). Young adults have lowerrates of private coverage than olderadults, which leads to higher uninsuredrates since adults have limited access topublic coverage. Young adults alsohave a much higher uninsured rate thanchildren, who are more likely to qualify for public coverage.

Among young adults, those with lowerincomes are much more likely to beuninsured

(Figure 2). Almost half of young adults with family incomes below150% of the federal poverty level (FPL)are uninsured ($16,802 for an individualand $21,734 for a family of two usingthe 2008 Census poverty threshold).

By contrast, only 9% of young adultswith incomes at or above 400% FPL areuninsured.

Details on uninsured rates for young adults and a profile of uninsured young adults are available in an appendixtable.

The term family is defined as a health insurance unit (those who are eligible as a group for “family” coverage).

Figure 1

Health Insurance Coverage of theNonelderlyby Age, 2008

UninsuredPrivateMedicaid/Other PublicChildrenYoung adults (19-29)

17%30%10%12%13%31%71%57%58%

Data may not total 100% due to rounding.Source: KCMU/Urban Institute analysis of 2009 ASEC Supplement tothe CPS.

Adults age 30-64

Figure 2

Young Adults’Health InsuranceCoverage by Family Poverty Level, 2008

9%6%3%32%53%72%88%22%37%45%10%23%

UninsuredMedicaid/Other PublicPrivate

18.6 M4.6 M12.5 M9.6 MNumberUnder 150%150-199%200-399%400% +

The Census federal poverty threshold was $11,201 for an individual under age 65 and $17,163 for family of three in2008. Family size and total family income are grouped by insurance eligibility. Young adults includes all individualsaged 19-29.Source: KCMU/Urban Institute analysis of 2009 ASEC Supplement to the CPS.

More than half of uninsured young adultshave incomes below 150% FPL

(Figure 3).These young adults are the least able toafford to purchase their own coverage, andthose who are working are likely in low-skill jobsthatmay not offer health insurance.More than one-quarter of uninsured youngadults have incomes from 150%-299% FPL.These individuals would likely also havetrouble paying the full cost of healthinsurance. Just 6% of uninsured youngadults have incomes at or above 400% FPL($44,804 for an individual in 2008).

Half of uninsured young adults live infamilies with incomes below $15,000 ayear

(Figure 4). Even when young adultswho have not worked in the past year areexcluded, the median family income of thosewho are uninsured is $18,000. Only 13% of uninsured young adults are in families withincomes at or above $40,000 a year,compared to about half of privately insuredyoung adults. Uninsured young adults havelower family incomes than uninsured olderadults, which leaves younger adults less ableto pay for health insurance premiums or formedical care if they remain uninsured.

About half of uninsured young adults arefull-time workers

(Figure 5).An additional18% of uninsured young adults are part-timeworkers. Similar to older adults who areworking, employed young adults can havelimited access to employer-sponsoredcoverage. Full-time students comprise only10% of uninsured young adults.

Studentsmay qualify for dependent coverage throughtheir parents or may be able to obtaincoverage through their school. Studentswithout access to affordable group coveragemay be unable to purchase insurance sincetheir incomes are often limited while theyare in school. Although many young adults are continuing their education, the majority of uninsured young adults are not students.

Data on student status is only available for young adults under the age of 25.

Figure 3

Uninsured Adults by Age andEmployment/Student Status, 2008

Source: KCMU/Urban Institute analysis of 2009 ASEC Supplement tothe CPS.

400% FPL +,6%300-399% FPL,6%150-199% FPL,12%200-299% FPL,14%<150% FPL,61%

Total = 13.7 million uninsured

Figure 4

$22,880$15,000$40,000Privately InsuredYoung AdultsUninsured YoungAdultsUninsured AdultsAge 30-64

Median Family Income by Age andHealth Insurance, 2008

Source: KCMU/Urban Institute analysis of 2009 ASEC Supplement tothe CPS.

Figure 5

Uninsured Adults by Age andEmployment/Student Status, 2008

Not working21%Full-timeworkers51%Part-timeworker18%

Full-timestudents(age 19-24)10%

Total = 13.7 million uninsured

Young adults who are not working include a small percentage who are part-time students and are not working. Student status isonly available for individuals age 19-24, so some of those considered to be part-time workers or not working may be older full-time students. About half of young adults who arefull-time students are also working part-time.Source: KCMU/Urban Institute analysis of 2009 ASEC Supplement tothe CPS.

Not working28%Part-timeworker15%Full-timeworkers57%

Total = 23.9 million uninsuredUninsured Young AdultsAge 19-29Uninsured AdultsAge 30-64