Older patients typically
utilize more and higher cost health care services than younger patients. One
way states can ensure that coverage remains affordable for everyone is to
support the use of age rating bands that spread premium costs over a range of
age groups. For example, in a state with a 5:1 age band, the ratio limits the
amount an older individual will pay to no more than five times what a younger
individual pays in premium dollars.
The ACA limits the age band to
3:1 starting on January 1, 2014. Consequently,
premiums will spike for young adults – the very people experts agree are needed
to help balance out the insurance risk pool. For example, moving from a 5:1 age band to a 3:1 age band will
cause premiums to increase significantly for individuals under the age of 30 –
potentially outweighing any subsidy benefit that may be available under the
ACA.
Younger individuals and families that are subject to
rate shock are likely to decide against getting coverage or may drop their
existing health care plan. This will
further drive up the cost of coverage for everyone else in the insurance pool.
Latest Documents
Oliver
Wyman has developed an actuarial model to study the impact of different reform
proposals on the individual and small employer health insurance market. According to this model, if the age band is
compressed to 3:1, premiums for the youngest-healthiest third of individuals
would be 35% higher in Year 1 compared to reform with 5:1 rating bands.
Other Reports/Papers
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09/28/09
Washington, DC - Health plans today reiterated their strong support for new market rules and consumer protections to cover all Americans and guarantee coverage for pre-existing conditions. "Health insurance reform is an essential part of health care reform", said AHIP President and CEO Karen Ignagni.
Press Releases
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Strategic Communications
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07/29/09