Federal Government involvement needed to ease costs for college graduates

"To help young adults transition from their parents' insurance policies to their own, we need to make health coverage more affordable. Government-sponsored reinsurance could make that happen," economist Katherine Swartz, an author and a professor at the Harvard School of Public Health, writes in a Boston Globe opinion piece.

About one in four adults ages 25 to 32 are uninsured, according to Swartz, who said the rate of uninsurance among young adults is related to the fact that many companies are hiring young adults on contract and do not offer them health insurance and other benefits.

Those who do not receive employer-sponsored health insurance must seek coverage in the individual insurance market where premiums "are significantly higher," Swartz says.

She adds that insurers are often "wary of their own potential customers ... suspect[ing] that those who apply for coverage are more likely to have high medical expenses."

As a result, some insurers "charge individuals and small groups higher premiums."

Swartz says that the premiums "could be reduced substantially if a government reinsurance program took responsibility for most of the costs of the 1% of people with the very highest medical expenses -- above $50,000 a year -- in the small-group and individuals markets."

Swartz says her proposed program "would have the same role that Fannie Mae has for mortgages and Sallie Mae has for college loans."

A "reinsurance program for health insurance markets would sharply reduce insurers' risks in these markets and reduce premiums to affordable levels," Swartz says, adding that bringing young adults into these markets "is essential if we want to keep a private health insurance system" and "pooling risks does not work unless a lot of insured people have low expenses" (Swartz, Boston Globe, 9/12).