NEW YORK (CNNMoney.com) -- Healthy twentysomethings may not worry much about insurance, but reform aims to change that -- by creating a low-cost plan just for them.
Legislators crafted a specific provision for the under-30 set because they'll play a critical role in the reform's success -- or failure. About 60 million Americans are uninsured, and about one-third of them are twentysomethings.
It's key that these "young invincibles" sign up for a plan. Any insurance pool requires healthy people to pay into the system, so the risk pool is broad enough to keep premiums low.
"If people in their 20s don't get on board, this entire [reform] simply will not work," said Sam Gibbs, senior vice president of eHealthInsurance, an online marketplace for health insurance quotes.
That's why the law calls for a special catastrophic insurance policy that's designed to offer low monthly premiums and a $5,950 deductible. It will be offered via state-sponsored exchange programs to people under 30 who don't qualify for Medicaid and aren't covered through their jobs. Low-income households that are exempt from the insurance mandate can also choose to purchase this plan.
As with much of the reform language, details about the plan's cost and coverage are somewhat vague.
Gibbs estimates that premiums will be less than $100 a month, while Aaron Smith, co-founder of the activist group Young Invincibles, estimates a monthly cost of $138.
Some experts say the bill's language also requires that the plan include three primary care visits per year; others believe insurers will have the option to exclude that benefit. The White House did not return calls for comment about the plan's specifics.
Gibbs said the government will likely "get more specific definitions out there" by mid- to late-2011, and insurers will begin tailoring plans to fit before the laws are implemented.
Sara Collins, vice president of independent health-care research group The Commonwealth Fund, noted many young adults will be eligible for Medicaid under an expansion that's also mandated by the reform bill. A separate provision in the bill allows people to stay on their parents' insurance until age 26.
"But young people who make slightly too much to qualify for Medicaid will be faced with a tough choice," Collins said. "They'll have to make sacrifices, and that will come down to the cost of the monthly premium."
And anyone who elects not to buy a policy will be subject to a penalty that starts in 2014, at $95 or 1% of income -- whichever is higher. In 2016, penalty jumps to $695, or 2.5% of income.
The Young Invincibles co-founder Smith, who is 27, thinks his peers will opt to buy a policy rather than eat the penalty. The Georgetown law student started the activist group last summer to "tell the truth about how the current system fails young people and to dispel the myth" that the under-30 set doesn't care about health coverage.
"The problem is that young people are not invincible -- not without health care," Smith said.
Although he is pleased with the basics of the under-30 plan, Smith thinks legislators "erred on the side of cheapness" and kept language too vague. In particular, he notes that young people use emergency rooms more than any other age group, and 15% of them suffer from chronic health conditions.
That's why the Young Invincibles group is lobbying for four additions to the under-30 plan, including a clear-cut requirement to include three primary-care visits with a reasonable co-pay; a mandate for one emergency room visit; and the option to add a prescription drug plan. The group also wants to add a clause that will allow young women who become pregnant to switch immediately to a more comprehensive health plan.
Once the specifics of this plan are laid out, the under-30 set will have a lot of transparency about what their policy covers, said Collins of The Commonwealth Fund.
"These customers are going to have simpler choices," Collins said. "And you'll know what you'll be paying out-of-pocket, which is high on anyone's mind."
eHealthInsurance's Gibbs thinks health care premiums will go down for people 65 and older, while young people may see an increase in rates. Overall, though, he said reform will be beneficial for the entire system.
The Congressional Budget Office anticipates that overall, health care premiums will be 7-10% lower thanks to the influx of young people.
Smith of the Young Invincibles hopes to see more focus on the under-30 age group in future health debates, and that the details of the bill's policy for twentysomethings will be hashed out "to make sure the catastrophic plan is not the subprime mortgage" of reform.
"In that climate of debate, legislators were so inundated that I'm not sure they had the time to focus on specifics," Smith said.
But Gibbs is confident that there will be plenty of talk about health care for twentysomethings -- out of necessity, if nothing else.
"This is the generation that has to be a major player," Gibbs said. "Everyone else is already marketed to, and I hope legislators realize that. Young people are the ones who make this a success or shut it down."
Kyle Bass is the founder and chief investment officer of Hayman Capital Management. More
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