Parental Health Insurance: The New Financial Aid

Despite the largest percentage decrease between 2010 and 2011, the U.S. Census Bureau reports that young adults, ages 19 to 25, continue to have one of the highest rates of the uninsured at 27.7 percent.  Aiming to address these high numbers, a major provision of the Affordable Care Act (ACA) already in effect is the expansion of dependent coverage up to age 26. Before the ACA, the rules allowing young adults to use their parents’ insurance plan varied across states. Although over half the states already had some form of dependent coverage expansion in place, it was generally restricted to specific populations including disabled young adults and full-time students.

In Does the Availability of Parental Health Insurance Affect the College Enrollment Decision of Young Americans, authors Juergen Jung, Diane M. Harnek Hall, and Thomas Rhoads, researchers at Towson University, examine the relationship between college enrollment decisions and dependent coverage access prior to the changes in the ACA. They study the students’ choices to enroll in school and pursue part-time versus full-time enrollment status.

To understand how the availability of parental health insurance impacts college enrollment, the authors examine data from the Survey of Income and Program Participation (SIPP), a longitudinal survey conducted by the United States Census Bureau. Using data from the same select groups each year for the most recent years available, 2001, 2004, and 2008, the authors are able to match individuals and their responses over time to isolate changes. To provide a more complete picture they merge parental information with the young person’s data file. Finally, to address concerns of unobservable factors the authors utilize three approaches to analyze the data—a logit model, a probit model, and a Heckman selection model—which also allow them to segregate between the choice to go to college and the choice between part-time and full-time enrollment.

They conclude that if an individual is considering attending college, those with parental health insurance are 22 percent more likely to enroll as full-time students. Among the current student population this number drops. Students with health insurance through a parent’s plan are only 6.5 percent more likely to enroll in school full-time instead of part-time. This relationship between parental coverage and the choice between part-time and full-time strengthens for older students.

While accessing parental health insurance has become easier with the passage of the ACA, the authors argue that fully understanding the outcomes that the older system incentivized could help predict any positive or negative unintended consequences from the new ACA regulations. For example, the authors predict a decrease in the number of postsecondary degrees, as young adults will be less inclined to enroll if insurance coverage no longer demands it. On the other hand, one could also imagine that removing the pressure of retaining health insurance could allow students to focus on a smaller course load during demanding semesters. In turn this could actually alleviate preventable program withdrawals, thereby decreasing the time it takes to complete a degree.

In the meantime numerous reports including those from the Center for Disease Control and the recent data from the Census Bureau have shown that the number of uninsured in this age group has dropped as they have been able to access parental health insurance through the ACA expansion. Unfortunately, the rates of uninsured young people continue to remain high as many come from low-income families unable to afford insurance for themselves. As this group of young adults begins to gain access to coverage through subsidies and Medicaid expansion in 2014, it will be interesting to see what role parental access to health insurance coverage plays in post-secondary enrollment decisions.

Feature photo: cc/Tax Credits