Monday, March 07, 2005
California's insurance mandates and unintended consequences
The state legislature of California is extending its war against employers, and doing so in a way that will backfire against parents desperate to emancipate their children.
A bill (AB 1698) in the California Assembly would require health insurers that provide dependant care coverage (including employers that self-insure) to extend that coverage to "children" up to age 26. The bill would apply to dependent children without any exception for student status, residency, or marriage.
This is a horrid piece of legislation, and if it should ooze through the California legislature I hope the Governator has the good sense to riddle it with bullets.
First, the proposed law would raise the cost of providing dependant care coverage to employees. Now we have to pay to cover their ne'er-do-well adult children as well? Since health benefits amount to a fixed cost per employee (more or less), this law has the potential to increase employment costs disproportionately for low wage employees. This will drive jobs from California.
Second, since healthy young adults in their twenties rarely actually need health benefits unless they get pregnant or injure themselves, they usually don't worry about whether or not they have it unless they have a specific condition that needs treatment. This law seems likely to promote adverse selection, in which dependants who need health insurance choose to remain dependants, rather than take gainful employment at an entry-level job with no benefits that might disqualify them from dependancy status.
Third, this law institutionalizes the idea that grown children should be the dependants of their parents. Now these "dependant" adult children will be even less likely to leave home and start building independant, emancipated lives. For some of them, emancipation will now mean that they lose their healthcare coverage, and at the margin that may mean the difference between dependance and independance. If this bill becomes law, California will actually be requiring that employers who grant family healthcare benefits subsidize the children of employees who choose to live with their parents! If I were a California parent, this would be one subsidy that I would not welcome.
Defeat AB 1698.
A bill (AB 1698) in the California Assembly would require health insurers that provide dependant care coverage (including employers that self-insure) to extend that coverage to "children" up to age 26. The bill would apply to dependent children without any exception for student status, residency, or marriage.
This is a horrid piece of legislation, and if it should ooze through the California legislature I hope the Governator has the good sense to riddle it with bullets.
First, the proposed law would raise the cost of providing dependant care coverage to employees. Now we have to pay to cover their ne'er-do-well adult children as well? Since health benefits amount to a fixed cost per employee (more or less), this law has the potential to increase employment costs disproportionately for low wage employees. This will drive jobs from California.
Second, since healthy young adults in their twenties rarely actually need health benefits unless they get pregnant or injure themselves, they usually don't worry about whether or not they have it unless they have a specific condition that needs treatment. This law seems likely to promote adverse selection, in which dependants who need health insurance choose to remain dependants, rather than take gainful employment at an entry-level job with no benefits that might disqualify them from dependancy status.
Third, this law institutionalizes the idea that grown children should be the dependants of their parents. Now these "dependant" adult children will be even less likely to leave home and start building independant, emancipated lives. For some of them, emancipation will now mean that they lose their healthcare coverage, and at the margin that may mean the difference between dependance and independance. If this bill becomes law, California will actually be requiring that employers who grant family healthcare benefits subsidize the children of employees who choose to live with their parents! If I were a California parent, this would be one subsidy that I would not welcome.
Defeat AB 1698.
2 Comments:
By 
, at
Mon Oct 03, 06:36:00 PM:
california home interest loan only
Information => california home interest loan only
By , at
Tue Jun 06, 11:27:00 AM:
You should try using spell check every now and then. You spelled dependent wrong 10 times.
