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Thursday, February 21, 2013

Forever Young?

Amy Traver

Staff Writer

In the past, women, people in less-than-perfect health, and older people were all charged much higher premiums than others—in fact, many were priced out of care. But, Obamacare changes that. The law alters the way that health plans can use an individual’s demographic and health information when setting premiums through the creation of new premium rating rules. This allows for a more even distribution of costs across all enrollees within the individual, non-group market (the market you buy coverage in if you don’t get it through your employer).

Critics of the law are spreading misinformation about how much of an affect this might have on younger, healthier enrollees. They argue that the new age rating rules will unfairly raise premiums on these enrollees in particular. But let’s take a closer look:

Premiums might go up for some healthier enrollees, but it is in an effort to level the playing field for all enrollees in terms of cost. (Click here to read a more detailed explanation of the premium rating rules and how they might affect you.) Critics tend to forget that the Affordable Care Act provides individuals with incomes up to 400% of the federal poverty level with tax credits to offset the cost of high insurance premiums. So, a single individual with income of up to $45,960 could qualify for this premium assistance to buy a policy if he or she didn’t have decent, affordable coverage from an employer. Younger enrollees are much more likely to be eligible for these new tax credits because they tend to have lower incomes. The tax credits also limit the amount people have to pay in premiums to a certain percentage of their income. So, while many younger enrollees might see higher premiums, they will not actually end up paying more. Also, many young people don’t even buy their own policies—they are covered through jobs, or they are covered on their parent’s plan, and that will continue under Obamacare. But if young people really want cheaper coverage, they can buy a less expensive “catastrophic plan” if they prefer. Basically, younger, healthier people will have many options about how to deal with any increase in premium price.

And, while it’s true that all premiums in the non-group, individual market are likely to rise, it’s actually because the coverage will be much better! Today, many policies are comparatively cheap because they do not actually cover many services and enrollees often face harsh surprises when they try to get care. For example, many of the current plans offered do not cover routine maternity care and have restrictions on mental health and prescription drug benefits. Starting January 1, 2014, these restrictions will no longer be allowed in new plans. So, the new coverage options will be slightly more expensive than some policies, but they will be more valuable. Premium dollars will pay for a more comprehensive set of services that will ultimately protect all enrollees—young and old—from accumulating debt due to having to pay for needed services out of pocket.

And isn’t that what insurance is all about? Having health coverage that protects you from unforeseen high medical costs? As Ezra Klein points out in a recent blog post, the Affordable Care Act was designed to protect everyone—the young and old, insured and uninsured—from incurring high medical costs. We might pay a little bit more when we are healthy, but we are sure to have affordable, comprehensive coverage when we are old or sick and need more care.

To my fellow young Americans: Let’s not be so foolish to think we will never get sick or grow old. Buying health insurance now is a wise investment for the future. No one can be forever young. 

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