How the ACA's 'dependent care mandate' hurts the exchange market

One of the main reasons Affordable Care Act exchange plans are losing money could be the fact that one of the ACA's own provisions prevents them from attracting enough healthy enrollees, according to a post from Forbes contributor Robert Book.

The ACA's "dependent care mandate" allows young adults to remain on a parent's health insurance plan until age 26, even if they don't still live with their parents. That makes it difficult for insurers to attract these younger, healthier people, as exchange plans often are the more expensive option, Book says.

And without a healthy population to balance out the risk pool, insurers lose money in the individual marketplaces. In fact, UnitedHealth has said it will pull out of most of the individual markets in which it operates in 2017, citing mounting financial losses.

Though the Obama administration claims that customers who signed up for plans during the most recent open enrollment period were younger and healthier than they have been in the past, actual enrollment in that age group is only 28 percent. In addition, Book notes, young adults who do enroll in exchange plans tend to be less healthy than those who don't.

So what are insurance companies to do to win this seemingly uphill battle? Book says they should start increasing their outreach efforts and target young people who do not have the option to be on a parental plan. "People in that situation might enroll in an exchange plan even if they are under age 26; in fact, it might be their only option other than remaining uninsured," he says.

To learn more:
- read the post