Insurance Premiums for Young Healthy to Rise

Young workforce? Healthy? Plan to pay more for health insurance than you expected next year.

The industry explanation for the change is rate band compression. Think of it as an unintended consequence of health care reform, a defect that smart people are trying to fix. Until then, folks who’ve historically had the lowest health insurance rates will see them climb, for both individual and group plans.

Health care reform requires insurers to restrict rates with a range of 3-to-1 when comparing the youngest and oldest members. That means the rates of the oldest members can be no more than three times as costly as the youngest. The rating range goes into effect Jan. 1, 2014.
But at a presentation to the Pittsburgh Technology Council on Thursday, Highmark President and CEO William Winkenwerder said the reality in health care costs is more like 6-, 8- even 10-to-1 between younger and older people. The result will be premium increases of 30 percent, 40 percent, 50 percent – even 100 percent, he said.

UPMC Health Plan and Aetna are among the other insurers that have echoed Winkenwerder’s prediction.

A recent study published by the American Academy of Actuaries found that young, single adults ages 21 to 29 and with incomes beginning around 225 percent of the federal poverty level or around $25,000 could expect to pay 42 percent more for health insurance than they would have had heath care reform failed.

The higher rates will simply discourage younger people from buying health care coverage, another unintended consequence of rate banding, according to the America’s Health Insurance Plans, a Washington D.C.-based outfit that represents for-profit insurance companies. The penalty for not having health coverage? $95.

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Retrieved From:
April 20th, 2013