Insurers look to extend coverage to dependents

The latest Health Reform Week looks at the move by insurers toward covering adult dependents up to age 26. Here is an excerpt:

Nationwide, out of roughly 2.4 million young adults eligible for coverage under their parents’ plans, HHS estimates that 1.2 million likely would enroll for dependent coverage in 2012. That figure likely would rise to 1.6 million in 2012 and 1.65 million in 2013.

According to HHS, the annual premium costs for adding a young adult, using a mid-range estimate, would be $3,380 in 2011, $3,500 in 2012, and $3,690 in 2013. This would raise employers’ group premium costs by 0.7% in 2011 and 1% in 2012 and 2013. For non-group or individual policies, the annual premium costs are anticipated to be $2,360 in 2011, $2,400 in 2012 and $2,480 in 2013.

Mike Sturm, a consulting actuary at Milliman, Inc., explains that premium rates likely will increase by “a fairly small amount” — perhaps up to 2% (the cost of adding two dependents out of 100 covered lives) — because it is written over all policyholders.

“It’s just covering more children falling through the cracks,” Sturm tells HRW. “It will add zero to 2% of cost. It might be 3% for [those plans with] a lot of 25-year-olds, but on average for typical large employers it’s going to be 1% to 2%. So it’s really not that big a deal, I don’t think.”

While the interim rule does not require an insurer to extend coverage to the covered child’s spouse or children, Sturm notes that he recently talked to a “very, very large carrier” that intends to cover dependents’ children — but not their spouses.

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