The Affordable Care Act Young Adult Mandate and Use of In-patient Care

One of the key potential benefits of increasing health insurance coverage is providing greater access to health care. Yet it is notoriously difficult to find good evidence of the effect of having insurance on utilization, since people who have insurance may differ from those who do not - for example, they may be more educated or less healthy – in ways that could also affect their use of health care.

Researchers Yaa Akosa Antwi, Asako Moriya, and Kosali Simon take up this question in their paper, Access to Health Insurance and the Use of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate (NBER Working Paper No. 20202). The authors note that the Affordable Care Act (ACA)'s young adult mandate provides a valuable opportunity to explore the effect of health insurance on utilization. The mandate allows young adults to remain as dependents on their parents' private health insurance plans until they turn 26 years old. This provision of the ACA went into effect in September 2010. The past literature has established that the man-date increased insurance coverage among young adults, but has not explored the mandate's effect on young adults' use of care.

The paper focuses on inpatient admissions, making use of a nationally representative database, the Nationwide Inpatient Sample. Inpatient visits are rare but costly events for the young adult population - in 2008, only about 5 percent of people age 19 to 25 had an inpatient visit, but these visits accounted for over 30 percent of health care expenditures. The authors have data on nearly 800,000 non-birth hospital visits during the period 2007 to 2011.

The authors look at use of any inpatient care as well as care related to treatment of mental health issues. Mental health care is of particular interest for this age group because the life changes that occur during the transition from adolescence to adulthood can trigger mental health problems. In fact, mental disorder is the second most common reason why young adults seek hospital-based medical care, after childbirth. Moreover, past research has established that the use of mental health care may be more sensitive to price than the use of other health care services, and thus more likely to be affected by insurance coverage.

The empirical strategy employed by the authors is to examine how inpatient care use changed after the law was implemented for the group potentially affected by the mandate, young adults ages 19 to 25. Young adults ages 27 to 29, who were unaffected by the mandate, are used as a control group to pick up any trends over time in the use of care that are unrelated to the mandate. The authors confirm that young adults ages 19 to 25 and 27 to 29 had similar visit trends before the law.

The authors find that inpatient visits increased by 3.5 percent in the affected group, those ages 19 to 25, relative to the unaffected group, following the mandate's implementation. This increase is driven primarily by visits that do not originate in the emergency room (ER), which are more likely to be scheduled and thus may be more sensitive to price.

The effect of the mandate on young adults' use of mental health care is even larger, as visits increased by 9 percent. Unlike general admissions, much of the increase came from visits that originated in the ER.

The authors also show that the mandate decreased the share of inpatient admissions from uninsured patients by nearly 3 percent, while increasing the share from patients with private health insurance. The share of admissions from Medicaid patients also declined after the mandate’s implementation, indicating that young adults may have found remaining on their parents’ insurance plan to be a more attractive source of coverage than Medicaid.

The authors note that their findings are consistent with the hypothesis that health insurance increases the use of medical services, including inpatient care. They note that their results on the use of hospital-based mental health services differ from a previous study of the effect of health reform in Massachusetts. This "could reflect the availability of outpatient mental health care providers in Massachusetts that might be absent in other states." They note that "future work using household- or individual-level surveys as well as more comprehensive hospital data sets will help us better understand the mechanism behind the increase in inpatient care use found in this study, as well as shed light on the effects of the law on the use of care in other settings."