ACA dependent coverage provision reduced high out-of-pocket health care spending for young adults

Since September 2010 the Affordable Care Act (ACA) has required that insurers allow children to remain as dependents on their parents' private insurance plans until age twenty-six. Studies have shown that this provision increased coverage rates among young adults. In this article we analyze whether the provision also protected young adults from large and uncertain out-of-pocket expenses. We found that the policy was associated with a statistically significant reduction in the share of young adults facing annual out-of-pocket expenditures greater than $1,500 (decreasing from 4.2 percent to 2.9 percent), compared to an increase in the proportion of their slightly older peers facing such expenditures (increasing from 4.4 percent to 5.4 percent), a net difference of -2.4 percentage points, or 57 percent. We conclude that the dependent coverage provision in the ACA provides financial protection for young adults at a time when they often face high debt burden but low wages.