By M.D. Kittle | Wisconsin Reporter
MADISON — Are you a fan of “Jersey Shore”? Do you like “Keeping Up With the Kardashians”? Can’t get enough of HBO’s porn light series “Girls”?
And are you single?
Chances are you’ll be paying more for out-of-pocket health insurance premiums, according to a new study.
(If you like anything with “CSI” in it, or “Dancing with the Stars” you’re probably OK, by the way).
A new study from global actuary firm Oliver Wyman finds “young, single adults aged 21 to 29,” with annual income roughly of $25,000, “can expect to see higher premiums” under the Patient Protection andAffordable Care Act. That’s the age demographic most interested in realty TV shows like the Kardashians, and the age category that could be most impacted by the new health care law critics have dubbed Obamacare.
The analysis, featured in the latest edition of Contingencies, published by the American Academy of Actuaries, also found many single coverage adults up to age 44 with incomes at 300 percent of the Federal Poverty Level, or $33,510 for an individual, will see rate increases, too.
“In our study, we found that if premiums in the nongroup (individual) market were to increase on average by 10 percent to 20 percent because of changes required by the ACA (as some estimates have predicted), premiums for younger, healthier individuals could increase by more than 40 percent,” asserts the article, written by Kurt Giesa and Chris Carlson.
“In total, this means that close to 4 million uninsured individuals aged 21 to 29 — or roughly 36 percent of those currently uninsured within this age cohort — can expect to pay more out of pocket for single coverage than they otherwise would, even given the availability of premium assistance,” the study notes.
As the authors note, the increase most directly and immediately affects health insurance affordability, but the price spikes would have a longer-term impact more detrimental overall.
“At the health system level, it may cause an increase in risk pools between those with immediate health care needs and those seeking protection against unforeseen future risks,” the article notes.
The meat of the matter is the ACA’s age rating restrictions on premiums, something the federal Department of Health and Human Services has heard an earful of concern from state insurance commissioners and private insurance providers and insurer associations alike.
Age rating effectively limits how much premiums can vary based on a person’s age, meaning insurers can no longer charge older individuals proportionately higher rates than younger people. ACA caps the ratio at 3 to 1. The provision, along with the brunt of Affordable Care Act law, goes into effect in 2014.
The idea is that the young and insured pay more so that older individuals pay less.
The problem, according to the report and critics of age band compression is the unintended consequences of the limitations on the entire health system.
“It increases the likelihood they (younger adults) simply will not buy coverage until they need it, raising the costs for everybody else,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, national trade association representing the health insurance industry.
Ultimately, Zirkelbach said, key provisions in the Patient Protection and Affordable Care Act undercut the “affordable” portion of the controversial law, hitting the health care system with higher premiums for young people. That could serve as a powerful disincentive for the system’s healthiest, the ones greatly responsible for lowering the overall cost of health insurance.
The Oliver Wyman analysis shows that under the ACA, single coverage premiums for people aged 21 to 29 who are not eligible for premium assistance, or government subsidies, would increase by 42 percent over insurance costs “absent the ACA.” People aged 30 to 39, in the same single coverage category, would see an increase of 31 percent. Individually insured people aged 60 to 64, those not receiving subsidies, would pay about 1 percent more.
Fabien Levy, spokesman for the U.S. Department of Health and Human Services, in an email told Wisconsin Reporter that the health care law will bring down costs and save money for young people and families.
“It’s misleading to look at one provision of the law alone – taken together, the law will reduce costs,” Levy said.
The ACA contains several provisions to ensure access and affordability, according to Health and Human Services literature, including allowing young adults under 26 the ability to remain on their parents’ insurance plan.
“Additionally, new marketplaces will provide insurance companies with millions of new customers who will be shopping for plans,” the department notes. “And with millions of new potential consumers, insurance companies can anticipate significant increases in revenue in the coming years.”
But a Wisconsin Reporter analysis in October noted the concerns of several state insurance commissions that the marketplace idea may not work out as well as the federal government expects. Provisions like age rating could cut into those projections, commissioners said.
“At first we have to take a look at who the uninsured in fact were before we can make that blanket claim how this law will positively impact health insurance,” said J.P Wieske, public information officer and legislative liaison for the Wisconsin Office of the Commissioner of Insurance.
When you look at state’s risk pool, the state’s relatively low uninsured rate and the underpinning reasons why people are uninsured in Wisconsin, Wieske said the office is “not so sure the solution (the federal government) came up with solves the actual problem. The main problem everyone saw was affordability.”
Gov. Scott Walker has opted Wisconsin out of state control of establishing a health care exchange, leaving the implementation to the feds.
Jim Tlusty isn’t directly tied to the debate, but he knows insurance. The president of Wisconsin Association of Mutual Insurance Companies, said the issue boils down to pay now or pay a lot more later.
“You know darn well that if a person can’t afford health insurance and that person gets sick, he goes to the emergency room,” he said, adding that insurance access should be as certain as a K-12 education.
“Everyone goes to school, everyone should be able to go to the doctor,” he said.
Contact M.D. Kittle at email@example.com