August 10, 2012: The Washington Post has an article out today on the impact of
the health care reform law on premiums.
The article noted five factors that could lead to higher insurance premiums:
1. Currently insurance companies offer lower premiums to younger Americans,
since they generally have lower health costs. But starting in 2014, the law
implements an age band so that the amount an older individual pays will be no
more than three times what a younger individual pays. So if a state currently
allows an age band of 5:1, older Americans might see a premium decrease — but
younger Americans would see a premium spike.
2. A similar dynamic exists with the law’s requirement that insurers selling
policies through the health exchanges will no longer be able to charge
different premiums based on a person’s health status when coverage is first
purchased. This is known as a community rating. So healthier individuals
generally will see higher premiums.
3. The popular provision that requires insurers to accept everyone regardless
of their health status (i.e., pre-existing conditions) also will transfer costs
to healthier individuals.
4. Insurers must offer an “essential health benefits” package, providing
coverage in 10 categories. The list includes: ambulatory patient services;
emergency services; hospitalization; maternity and newborn care; mental health
and substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and devices;
laboratory services; preventive and wellness services and chronic disease
management; and pediatric services, including oral and vision care.
It’s a great package, but the benefits are more extensive than what most
individuals and small businesses already purchase. So that will also boost
premiums, especially if you currently have a less extensive plan. A report in
the June edition of Health Affairs found that “more than half of Americans who
had individual insurance in 2010 were enrolled in plans that would not qualify
as providing essential coverage under the rules of the exchanges in 2014.”
5. The law also contains various taxes and fees, including a health insurance
tax. Those costs presumably would be passed on to consumers, resulting in