Healthcare Business News

Reform Update: Hospital visits rise for young adults on parents' plans

By Melanie Evans
Posted: June 11, 2014 - 4:00 pm ET

Young adults who gained coverage on their parents' health plans under Obamacare showed an uptick in non-emergency hospital visits by the newly insured, new research has discovered.

In the first year after the Patient Protection and Affordable Care Act allowed parents to extend parents' coverage to dependents younger than age 26, demand for hospital care among adults ages 19 to 25 increased 3.5% more than did demand for hospital use among adults 27 to 29, according to the study published by the National Bureau of Economic Research.

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Hospital visits were less likely to start with a trip to the emergency room with the under-26 coverage in place, suggesting that young adults sought more discretionary services, wrote authors Yaa Akosa Antwi, Kosali Simon and Asako Moriya of Indiana University.

Notably, hospital visits among young adults were not more costly or lengthy after the insurance expansion. Nonetheless, there were more trips to the hospital, where costs quickly escalate thanks to hospitals' overhead.

“This is a very expensive, intensive form of healthcare,” said Simon, a health economist and professor at the Indiana University School of Public and Environmental Affairs.

Young adults also were more likely to be hospitalized for mental healthcare, the study said. Demand for outpatient mental healthcare is more sensitive to health insurance coverage than other medical care, prior research suggests. Simon and her colleagues found inpatient mental health visits increased 9% among young adults.

Results, however, look exclusively at the first year after the 2010 law expanded dependent coverage, Simon said. The increased use of hospital services may have been pent-up demand that will not continue. Newly insured adults also may eventually connect with primary-care services that will prevent future hospitalization, she said. Or health insurers may also work to more aggressively manage care among the newly insured, she added.

The research found the number of hospitalized young adults dropped by 12.5%.

Prior research suggests that greater insurance coverage typically results in greater use of healthcare services, regardless of whether health plans are public or private, said Amanda Kowalski, an assistant professor of economics at Yale University.

More pay at risk, and soon

More than 100 payers and 350 healthcare providers surveyed for McKesson Corp. by research firm ORC International predict a rapid decline in the use of fee-for-service payment. Nine of 10 payers reported they had already adopted some alternatives to fee-for-service, such as pay-for-performance, capitation, bundled payments or shared savings. Payers said fee-for-service would account for 32% of payment in five years, compared with 56% today. Hospital respondents, too, said fee-for-service reimbursement would plunge to 34% from 57% of payments currently.

Not so fast

Rivals of Partners HealthCare, Boston, are urging the Massachusetts attorney general to publicly air details of a deal that allows Partners to acquire three hospitals, the Boston Globe reports.

The deal “raises significant concerns with respect to our ability to hold down healthcare costs by competing effectively with Partners and one another as providers and to control the costs we incur to cover our employees,” executives with Beth Israel Deaconess Medical Center, Atrius Health, Lahey Health System and Tufts Medical Center wrote in a letter.

Follow Melanie Evans on Twitter: @MHmevans

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