One of the policies that President Obama often cites to defend his health care law is the mandate forcing insurers to allow "children" to stay on their parents' policies until age 26. That's understandable, because the idea is among the most popular individual provisions in the otherwise unpopular law. A New York Times/CBS poll released in March found 67 percent of Americans want at least the health care law's individual mandate overturned by the U.S. Supreme Court, but 68 percent supported the mandate for those under 26.
For this reason, many Republicans have been reluctant to criticize this aspect of Obamacare. The Wall Street Journal last month reported Republican Rep. Steve Stivers, of Ohio, was even floating the idea of increasing the mandate to age 31. But a new report from Republicans on the Congressional Joint Economic Committee, or JEC, details why this aspect of Obamacare, often referred to as the "slacker mandate," is a disastrous policy.
The JEC report, which was published Thursday, notes that the extension of the mandate to those up to age 31 would theoretically allow Facebook billionaire Mark Zuckerberg to stay on his parents' insurance policy. But even the current provision is problematic. When insurers are forced to allow people to stay on their parents' policies until they are 26, the cost of this expanded coverage is transferred to others -- specifically, to those who don't have dependents under age 26. The Obama administration has estimated that such transfer costs will range between $3.5 billion and $6.9 billion annually. A George Mason University study released in January suggests the real number is likely higher, because the administration failed to account for administrative expenses and other costs.
On top of the costs involved, the slacker mandate creates perverse incentives. If individuals can stay on their parents' insurance policies until age 26, they are that much less motivated to look for work -- in fact, if they find a job that offers health insurance, they are no longer eligible to stay on their parents' plans. Also, as the JEC report points out, "to the extent that businesses are forced to absorb the billions of dollars in costs associated with the mandate, they would prove less eager to take on additional workers, or increase hours for existing workers."
As this editorial page has argued before, it's important for Republicans to develop a set of policies to reform the nation's health care system so they aren't caught flat-footed if the Supreme Court overturns Obamacare later this month. Congress should enact free market reforms that end the discrimination in the tax code against individuals buying their own health insurance and remove barriers preventing younger Americans from purchasing inexpensive, catastrophic health plans of their own. Such reforms would increase coverage among younger Americans without passing costs on to others, distorting economic incentives or nurturing a culture of dependency.