The Edmond Sun

Opinion

October 1, 2013

The Affordable Care Act’s youth problem

MILWAUKEE — Young Americans soon may experience “sticker shock” when shopping for health insurance. A new survey of insurers estimates that premiums will almost triple for a hypothetical 27-year-old man next year, once all the federal health reform law’s rules take effect.

That could be problematic for its efforts to cover young people. More than a quarter of the 67 million Americans between the ages of 19 and 34 are uninsured. They may well stay that way if insurance becomes unaffordable.

That doesn’t have to be the case. Lawmakers can make health coverage more affordable by relaxing restrictions on what insurers can charge young adults -- thus allowing them to offer lower premiums.

The Patient Protection and Affordable Care Act regulates the health insurance market in three main ways. First, all Americans — with a few exceptions — must secure health coverage.

Second, because everyone must carry coverage, the law requires insurers to sell policies to whomever wants to buy them. They can’t deny coverage because of health status or history — a reform called “guaranteed issue.”

Third, in an attempt to control the cost of coverage, the law prevents insurers from charging older individuals more than three times what they charge younger beneficiaries — a rule called “community rating.”

The community rating rules were created to ensure that insurance companies don’t exclude sick people or those with pre-existing conditions by only offering them policies with sky-high premiums. They were also designed to ensure that coverage for older Americans not yet eligible for Medicare would be affordable.

The problem is a matter of facts. It costs six times as much to insure a 64-year-old as it does an 18-year-old. While we might like to think that we can cap a 64-year-old’s costs at three times the level of an 18-year-old’s, the math just doesn’t work. In the end, younger, healthier people will subsidize insurance for those who are older and sicker.

Even with federal subsidies, those higher premiums will be unaffordable for most young Americans, who are more likely to have lower incomes.

According to a five-city survey conducted by the American Action Forum, community rating will contribute to a 190-percent rate increase for younger, healthier people living in Milwaukee. Across all five cities, the average premium hike for young people will reach 169 percent.

To make matters worse, community rating-fueled premium hikes won’t just affect young people — by 2014, small businesses with up to 50 workers will face them, too. And by 2016, the hikes will hit all companies with less than 100 workers.

This will represent a dramatic rating shift for small employers in the 42 states where rates are based on a number of factors including broad age differentials.

In 49 states, employers with between 50 and 100 employees don’t have to shop in the small-group market but rather in a mid-market akin to the way larger groups purchase coverage. That grants them greater choice of health plans and more rate flexibility.

Lumping all these firms together may seem like a good idea because it will increase the size of the health insurance pool. But it will drive premiums up for everyone by moving more employers into the the mandatory modified community rating structure.

If premiums spiral upward, millions of young people will choose not to buy coverage — whether on their own or through their employers — and instead pay fines the law prescribes for being uninsured. If there aren’t enough young people paying into the insurance pool to subsidize coverage for older Americans, premiums will shoot up even further.

This process can repeat itself again and again, resulting in what actuaries call a “death spiral” of higher and higher premiums — and lower and lower coverage rates.

For evidence, look to the eight states that adopted community rating and guaranteed issue rules in the 1990s. According to a study from Milliman, a consultancy, the insurance markets in all eight experienced death spirals to some degree. Two states ultimately abandoned their reforms.

Three others, however, took a different approach. They chose to relax their community rating rules. And their insurance markets have survived.

Federal lawmakers should learn from these state experiments and relax PPACA’s community-rating requirements, too.

Lawmakers must do everything they can to ensure that the “Affordable Care Act” actually makes insurance more affordable. Revising the community-rating rules is an effective way to do so.

JANET TRAUTWEIN is CEO of the National Association of Health Underwriters.

1
Text Only
Opinion
  • Digging out of the CIA-Senate quagmire

    Last week, the Senate Intelligence Committee, led by Sen. Dianne Feinstein, D-Calif., voted to declassify parts of its report on the CIA’s rendition, detention and interrogation program. The White House, the CIA and the Senate still have to negotiate which portions of the report will be redacted before it is made public. But this is an important step in resolving the ugly dispute that has erupted between the intelligence committee and the intelligence agency.
    The dispute presents two very serious questions. Was the program consistent with American values and did it produce valuable intelligence? And is effective congressional oversight of secret activities possible in our democracy?

    April 15, 2014

  • Los Angeles Times: Congress extend jobless benefits again

    How’s this for irony: Having allowed federal unemployment benefits to run out in December, some lawmakers are balking at a bill to renew them retroactively because it might be hard to figure out who should receive them. Congress made this task far harder than it should have been, but the technical challenges aren’t insurmountable. Lawmakers should restore the benefits now and leave them in place until the unemployment rate reaches a more reasonable level.

    April 14, 2014

  • Many nations invested in Israel

    Former Israeli Ambassador to the United States Yoram Ettinger recently spoke to a gathering at the Chabad Center for Jewish Life and Learning in Oklahoma City. The event began with a presentation by Rabbi Ovadia Goldman, who told the attendee that the  upcoming Jewish holiday of Passover was an occasion for them to embrace the children of God, which is all of humanity.

    April 14, 2014

  • Coming soon: More ways to get to know your doctor

    Last week, the federal government released a massive database capable of providing patients with much more information about their doctors.
    The Centers for Medicare and Medicaid Services, the government agency that runs Medicare, is posting on its website detailed information about how many visits and procedures individual health professionals billed the program for in 2012, and how much they were paid.
    This new trove of data, which covers 880,000 health professionals, adds to a growing body of information available to patients who don’t want to leave choosing a doctor to chance. But to put that information to good use, consumers need to be aware of what is available, what’s missing and how to interpret it.

    April 14, 2014

  • HEY HINK: Hateful bullies attempt to muffle free speech

    Hopefully we agree it should be a fundamental right to voice criticism of any religion you wish. And you should have the right to sing the praises of any religion you choose. If criticism of religion is unjust, feel free to make your best argument to prove it. If criticism is just, don’t be afraid to acknowledge and embrace it. If songs of praise are merited, feel free to join in. If not, feel free to ignore them. But no American should participate in curbing free speech just because expression of religious views makes someone uncomfortable.

    April 11, 2014

  • Putting Oklahoma parents in charge

    Oklahoma’s public schools serve many children very well. Still, for various reasons, some students’ needs are better met in private schools, in virtual schools or elsewhere. That is why two state lawmakers have introduced legislation to give parents debit cards, literally, to shop for the educational services that work best for their children.

    April 11, 2014

  • Israelis, Palestinians are losing their chance

    Developments in the Middle East suggest that prospects of success for the Israeli-Palestinian talks, to which Secretary of State John Kerry has devoted countless hours and trips, are weakening.

    April 11, 2014

  • Teens might trade naked selfies for mugshots

    Will teenagers ever learn? You think yours will. Maybe so. But it's likely that was also the hope of the parents of children who were so shamed by nude photos of themselves that went south - how else can they go - that they killed themselves.

    April 11, 2014

  • Tax deadline and no reform in sight

    The annual tax filing deadline, which comes next Tuesday, provides a good opportunity for tax reform advocates to decry the current law’s increasing complexity and inequities, and to urge enactment of a simpler, fairer system.

    April 10, 2014

  • To get quality care, it helps to be the right kind of patient

    I am a family physician. Sometimes I must step out of the comfort of my clinical role and into that of patient or family caregiver. Generally, these trips to the other side of the exam table inspire a fair amount of anxiety.

    April 8, 2014

Poll

Do you agree with a state budget proposal that takes some funds away from road and bridge projects to ramp up education funding by $29.85 million per year until schools are receiving $600 million more a year than they are now? In years in which 1 percent revenue growth does not occur in the general fund, the transfer would not take place.

Agree
Disagree
Undecided
     View Results