The Cost of Obamacare’s “Slacker Mandate”

What with the rapid unraveling of the Obamacare health insurance exchanges, Americans might be excused for having forgotten one of Obamacare’s first intrusions: The “slacker mandate.” This was the provision that requires employer-based health plans to cover “children” on their parents’ plans until they are 26.

It took effect in 2010. No other law requires parents to take care of their kids until they are 26. But health care is different, as we all know. The slacker mandate increased premiums by one to three percent, and it’s associated with the introduction of more nuanced employer-based benefits, according to research discussed by Bruce Japsen.

A couple of things to note: The costs of the slacker mandate were not socialized. The entire cost of the mandate is borne by the parents, through increased premiums. Pre-Obamacare, employer-based benefits tended to have three tiers of premium: Single, couple, or family. It did not matter how many kids you had (because covering kids is so inexpensive that it’s not worth the administrative hassle of adding a surcharge for each kid). The slacker mandate changed that, and more employer-based plans now charge a premium for each dependent.

Anyway, the results are in, according to a new study published by the National Bureau of Economic Research:

If, as suggested by prior work, the provision reduced the amount of time young adults work, the question arises, what have these adults done with the extra time?

The extra time has gone into socializing, and to a lesser extent, into education and job search. Availability of insurance and change in work time appear to have increased young adults’ subjective well-being, enabling them to spend time on activities they view as more meaningful than those they did before insurance became available.

(Gregory Dolman & Dhaval Dave, “It’s About Time: Effects of the Affordable Care Act Coverage Mandate on Time Use,” NBER Working Paper No. 21725, November 2015.)

The Washington Post has reproduced some of the charts. Here are some examples:

  • Socializing has increased about 30 minutes per day, among 23 to 25-year olds.
  • Sleeping has gone up about 10 minutes a day, among 19-25-year olds.
  • Work has gone down about 20 minutes a day, among 23-25-year olds.
  • Exercise has gone up about 10 minutes a day, among 23-25-year olds.

Well, I am glad they are staying fit.

Look, there was never a law preventing parents from paying for their kids’ health insurance after they reach majority. Mandating that parents pay so these young adults can spend more “meaningful” time socializing instead of working will likely have detrimental long-term consequences for their earnings and fulfillment that exceed any benefits they might get from Obamacare.

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For the pivotal alternative to Obamacare, please see Independent Institute’s book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.

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