individual market – The Health Care Blog

The (Not So) Affordable Care Act – Get Ready For Some Startling Rate Increases

Dec 5, 2012• 76

By ROBERT LASZEWSKI

What will health insurance cost in 2014?

Will the new health insurance exchanges be ready on time or will the law have to be delayed?

There Will Be Sticker Shock!

First, get ready for some startling rate increases in the individual and small group health insurance marketplace due to the changes the law dictates.In a November 2009 report, the CBO estimated that premiums in the individual market would increase 10% to 13% on account of the health insurance requirements in the ACA. In the under 50 employee small group market, the CBO estimated that premiums would increase by 1% to a decrease of just 2% compared to what they would have been without the ACA. All of these differences in premium would be before income based federal subsidies are applied to anyone’s premiums.

In recent weeks, the Obama administration issued a series of proposed regulations for the health insurance market. Since then, I conducted an informal survey of a number of insurers with substantial individual and small group business. None of the people I talked to are academics or work for a think tank. None of them are in the spin business inside the Beltway. Every one of them has the responsibility for coming up with the correct rates their companies will have to charge.

Hold onto your hat.

On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of outright price increases or bigger deductibles and co-pays.

The Age Rating Game: Will Older Americans Pay More Under Health Reform?

Aug 20, 2012• 107

By Maggie Mahar

The Affordable Care Act leaves it to the states to decide whether they want to let insurers charge older Americans more for coverage. If a state takes no action, a 64-year-old buying his own insurance in the individual market will pay up to three times more than an 18-year-old. In the small-group market – if a small business employs an unusually large number of older workers – the same 3:1 ratio applies.

Today, in most states, there are no caps on how much insurers can charge a 60-something forced to purchase his own insurance. In the individual market, only New York State bans age rating altogether, and just three other states limit how much premiums can vary, based on age, to less than 3:1. When insurers sell policies to small businesses, Vermont also prohibits age rating, but only five other states cap increases.

To check whether your state shields older boomers in either of these markets, take a look at these charts. (A checkmark in the right-hand column means that age rating is now unregulated in that state.)

Help from the younger generation?

Is the Fact that I Am a Woman Considered a Pre-Existing Condition?

Aug 5, 2012• 121

By Maggie Mahar

The male body has long been considered the “standard” for health care coverage. Having a woman’s body is seen as an expensive anomaly, and women pay dearly for being different.

When they buy their own health insurance in the individual market, women must lay out an extra $1 billion a year, simply because they are women. Some argue that this is fair: after all, a woman could become pregnant, and labor and delivery are costly.

But the truth is that, even when maternity benefits are excluded, one-third of all health plans charge women at least 30 percent more, according to a report released just last month by the National Women’s Law Center.

In 36 states, “92 percent of best-selling plans charge 40-year-old women more than 40-year-old men,” the Center reports, and “only 3 percent of these plans cover maternity services … One plan in South Dakota charges a woman $1252.80 more a year than a 40-year-old man for the same coverage.”

Today, less than half of American women can obtain affordable insurance through a job, which explains why millions buy their own insurance in the individual market. In that market, just 14 states ban gender rating: California, Colorado, Maine, Massachusetts, Minnesota, Montana, New Hampshire, New Mexico, New Jersey, New York, North Dakota, Oregon, Vermont, and Washington.

Pricing based on gender also plagues the small group market, where insurers frequently jack up premiums if a small or mid-size business employs too many women. This means that many of these employers just can not afford to offer insurance. Only 17 states address the problem.