Today's Mallard Fillmore comic inspired this post, which Li'l Writer Guy had actually been working on in the background ever since a conversation we had about the subject last night.

Mind you, I don't know any of the details of how it will work, and am only commenting on the theory that children should be covered on their parents' health insurance until they are 26 years old.

It shows the hazards of exposure to pop culture that I was tempted to respond to this idea with "WTF?"  Language I would never speak begins to look harmless as an acronym, and one commonly in print at that.  But I digress.

There are at least two issues here.  One is the need to address the health care gap many young people experience when they begin their adult lives.  An affordable source of insurance for those who are, as the Japanese so elegantly put it, "not in education or employment," opens up intriguing possibilities for self-directed learning, volunteer work, internships, and other ways of independent exploration that could better prepare a person for college, grad school, or a good career fit.  Too many people move mindlessly from high school to college to the workplace without gaining the life skills necessary to get the most out of them.

On the other hand, this is yet another instance of the bizarre phenomenon of extended adolescence.  Parents are not only paying for a college education for their children, but many are covering their graduate school expenses.  Worse, the schools expect this, and require information on parental income for scholarship applications.  (I think universities have some nerve mocking "helicopter parents" while freely expecting their money.)  Now the parents' insurance is expected to cover their children long after those children should be on their own.  We have come a long way, and not all for the better, from the days when teenagers—some of them quite young—routinely married, held responsible jobs, raised children, and supported families.  You can say all you want that it takes more education to acccomplish that in today's society, and I'll mostly agree, though I'll add that the amount of time given to acquiring that education is shockingly and unnecessarily high.  But in any case it cannot be good that we've removed a decade of strong, healthy, exuberant and enthusiastic youth from the years of independence and productivity.

Posted by sursumcorda on Wednesday, May 12, 2010 at 8:18 am | Edit
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I assume the reason behind the legislation was something like, "X% of kids up to age Y don't have health insurance". Given that 50% of them are invincible guys who wouldn't ever go to the doctor anyway, the statistics are kind of skewed. I wonder what the statistics are for people who actually would want insurance and truly can't get it due to price.

And given that I can get insurance for $80/month, I would expect that ten years ago, I could have gotten it for $40. I did get my own insurance when I became a part-time student, and so could no longer be covered on my parents' insurance. It cost $82/month, with a $0 deductible, and no out of pocket expenses. At the time, I thought it was insanely expensive, since I wouldn't ever use it.

Posted by Jon Daley on Saturday, May 15, 2010 at 3:59 pm

I actually went without insurance for a year or two because $40/month seemed way too expensive, when my typical medical expenses were about $60 every 3 years.

Posted by Peter V on Monday, May 17, 2010 at 1:15 pm

What does it mean for children to be covered on their parents' health insurance? Does that mean that for the same premiums the parents get benefits for a second (and third, fourth, etc.) person, or that parents are legally mandated to pay premiums for their children until age 26, or something else yet?

By the way, baby's insurance plan will cost more than any of the plans mentioned here as insanely expensive...

Posted by Stephan on Tuesday, May 18, 2010 at 12:31 am

"Insanely expensive" in this context is from the point of view of single guys who are still operating under the "Why would I ever want to go to the doctor?" philosophy.

I remember being told firmly by my parents never to let my insurance lapse even if it was temporarily expensive, because if I had continuous coverage I could never be rejected for "pre-existing conditions." Apparently that wisdom is no longer being passed on—or else the situation has changed.

I'm not sure what it means in this case, but in our case the health insurance we bought (through our employers) for years had two prices for two coverage options: individual and family. "Family" included husband, wife, and however many children they had, until those children reached the age of 18, unless they were full-time students, in which case the age was 23. It was all very affordable and reasonable because it was available through our employers' group plans and because in those days no one dreamed that health insurance should cover everything. It was designed to cover the unusual, unexpected, crazy expenses, like cancer or other large expenses no one could be expected to plan into a budget. Ordinary medical expenses were expected to be paid out-of-pocket, the same way one paid for food, rent, and the new TV set. That, of course, was before ordinary medical expenses became insanely expensive themselves...for which insurance can take a good chunk of the blame. But we must deal with the way things are, not with the way I think things should be!

Now things have changed and become much more complicated, with insurance options that cover regular preventive care (a good thing), every scrape and scratch (a bad thing), "spouse substitutes" of all sorts, different numbers of children (e.g. 1-2, 3-5, 6+) and who knows what other combinations.

But bottom line, I suspect that what the "until they're 26" will mean at minimum is that insurance plans will be required to revise the age limit for "child" in a family plan to under 26, which may or may not result in higher premiums. If the law actually requires parents to pay premiums for their children until that age, it is worse than I thought, though the trend does seem to be that way.

Posted by SursumCorda on Tuesday, May 18, 2010 at 7:29 am

My employer subsidizes my medical insurance, but we buy insurance for the rest of the family. For a mother and any number of children is a single price. We have a high-deductible plan, which means we pay all our bills unless they get ridiculously high (which can happen fast if anything unexpected happens) for about $350/month.

Posted by Peter V on Tuesday, May 18, 2010 at 1:00 pm

Letting your health insurance lapse for pre-existing reasons only matters if you have pre-existing conditions.

And from my research into different plans, most insurance companies define "pre-existing" as the last 3 years, some to the last five years.

And so, I'd guess for most college aged guys, they haven't had anything that has happened in the last number of years, other than some colds, or a broken bone or something, and so pre-existing conditions aren't something to think about (particularly if you buy the argument that the twenty something guy is even thinking about pre-existing conditions in the first place, as opposed to having less money for cds and pizza).

If the 26 year old wants insurance, it would be cheaper to be on his parents than on his own, at least at current prices.

People do need to remember that even now in our country there is a myth of expensive on-your-own health plans, at least for the population under 40 years old or so. In general, it is cheaper to be on your own when in your twenties and thirties, since the employer coverage is subsidizing the older employees.

If you have major illnesses, or large amount of prescriptions, you have to pay more for your premiums. American politicians don't like that, and think our insurance coverage should be more like welfare or something, where everyone should get stuff for free, and have policies that discourage people from making more money and paying for things on their own.

(We are currently in the situation where I need to make somewhere around 3K more pre-taxes in order to have $1 more post-tax. Once the new health insurance plans start, the rich people (defined as those making more than 80K) will be subsidizing everyone who makes less than 80K. I'm pretty positive that our insurance costs will go up, even counting the subsidies, since we pay way below the average American (at least below what the politicians say the average is)

Lastly, a baby is much more likely to spend healthcare money than I am, so it makes sense that the insurance would be higher for a baby. It does annoy me that the premiums for catastrophic plans are not lower than they are, for all ages.

I hadn't heard about his new job, but apparently, everywhere that Peter has worked has not had as good coverage as every place that I've worked or consulted for, as he has generally gotten separate coverage for his wife/kids, and we always had much coverage through the employer.

Posted by Jon Daley on Tuesday, May 18, 2010 at 2:55 pm

I'm not sure I understood: Is it cheaper for the 26-year-old to be on his parents' plan, or is it cheaper to be on his own, since he's in his twenties?

The Swiss system is part welfare, part insurance. My monthly premiums are nearly three times baby's, and so will Janet's be. The premium has nothing to do with our level of income, but only with (a) where we live and (b) how high our deductible is. The reason it is more expensive is that it covers all manner of things that a baby wouldn't be expected to have (like a fracture, or to name a random example, a wrench in my eye ;-) ).

I am shocked that of your next 3'000 you'd have to pay 2'999 in taxes! How does that happen?

Posted by Stephan on Wednesday, May 19, 2010 at 12:43 am

Letting your health insurance lapse for pre-existing reasons matters if you don't know you have them. The example that made my father so adamant was that of a son of a friend, who ignored a gap of three days between the end of his college coverage and the beginning of his employment (with coverage by his employer). At the pre-employment physical, they discovered a cancer. If he had not had a break in coverage, the employer's insurance would have had to include this problem, but as it was they were able to exclude coverage. It's a little like riding the Basel trams without a ticket: most times, you can get a free ride, but when you get caught, the penalty is huge.

Posted by SursumCorda on Wednesday, May 19, 2010 at 9:49 am

I'm not sure that is how pre-existing conditions works anymore. When I went to get physical therapy for my split abdominal muscles, they only cared if I was diagnosed with it before. I'm pretty sure (from my lay person's experience) that I did indeed have that "condition" before my new insurance, but it did not matter because it was not previously diagnosed by a health care provider. So the insurance covered my physical therapy (or would have if we hadn't had that deductible issue which was a separate problem.)

Posted by joyful on Wednesday, May 19, 2010 at 12:10 pm

Jon, I think you meant that to keep $1k you need to earn $3k. That is a tax rate of 66%. Can you fill in the details? I think 14.7% for social security as a self employed person, then 15% or 25% marginal Federal tax. What is the PA tax? Not another 26%, is it?

Posted by Dad-o on Thursday, May 20, 2010 at 10:20 am

Pre-existing conditions. Any gap in insurance coverage is a risk to he who has the gap. For something relatively simple, like physical therapy, one's insurance company may simply be content to cover if not previously diagnosed. For something like cancer, with a larger cost to them, they will look harder for an excuse not to cover. And for something that can be tagged as genetic - look out, you've had that forever. This may be one argument for some kind of limit on pre-existing condition limitations -- however the current US health bill, as presently constituted, seems to encourage paying the penalty for non-coverage until one has a condition one wants to be insured for.

Posted by Dad-o on Thursday, May 20, 2010 at 10:26 am

No, I am referring to marginal tax rates, not total tax rates.

And yes, I meant if I earn $1K more, I end up with less money in the bank than I had this year.

That is primarily due to our state tax being "forgiven", which goes away if we earn a bit more money.

And then also the kids' health insurance and health care and dental care is free also based on our income.

As for the income tax rates, we don't have to pay federal income tax any more, primarily due to the child credits, so it is just the self-employment tax, and the child credit eats into that too.

I just went back through to see how often we haven't "officially" paid income tax (and thus joining the statistic that says 40% (or whatever the number is) of US taxpayers pay $0 income tax), and we've only paid $0 these last two years. But, we've had a couple ~$300 years, and a couple ~$1000 and a one ~$3000 or so.

At one point when we switched insurance plans (within the same company) they sent a couple letters to see if the birth was a pre-existing condition, and it took a surprising amount of effort (ie. more than one phone call/letter) to state that yes, since we'd been on the plan for 11 months, it would be kind of hard for it to be pre-existing...

Posted by Jon Daley on Monday, May 24, 2010 at 9:39 pm
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