Health premiums could rise 17 percent for young adults

CHICAGO — Under the health-care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans — a shift expected to raise insurance premiums for young people when the plan takes full effect.

Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That's when premiums for young adults seeking coverage on the individual market would likely climb 17 percent on average, or roughly $42 a month, according to an analysis conducted for The Associated Press.

The analysis did not factor in tax credits to help offset the increase.

The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers as the nation deals with the highest unemployment rate in 26 years.

Consider Nils Higdon, 24. The self-employed percussionist and part-time teacher in Chicago pays $140 each month for health insurance. But he's healthy and so far hasn't needed it.

The law relies on Higdon and other young adults to shoulder more of the financial load in new health-insurance risk pools. So under the new system, Higdon could expect to pay $300 to $500 a year more. Depending on his income, he might also qualify for tax credits.

At issue is the insurance industry's practice of charging more for older customers, the costliest to insure. The new law restricts how much insurers can raise premium costs based on age alone.

Insurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old.

The rest will be shouldered by young people in the form of higher premiums.

To be sure, there are benefits that balance some of the downsides for young people:

• In roughly six months, many young adults up to age 26 should be eligible for coverage under their parents' insurance — if their parents have insurance that provides dependent coverage.

• Tax credits will be available for individuals making up to four times the federal poverty level, $43,320 for a single person. The credits will vary based on income and premiums costs.

• Low-income singles without children will be covered for the first time by Medicaid, which some estimate will insure 9 million more young adults.

But on average, people younger than 35 who buy their own insurance on the individual market would pay $42 a month more, according to an analysis by Rand Health, a research division of the nonpartisan Rand Corp.

Jim O'Connor, an actuary with the independent consulting firm Milliman, came up with similar estimates of 10 to 30 percent increases for young males, averaging about 15 percent.

"Young males will be hit the hardest," O'Connor says, because they have lower health-care costs than young females and older people who go to doctors more often and use more medical services.

Predicting exactly how much any individual's insurance premium would rise or fall is impossible, experts say, because so much is changing at once. But it is possible to isolate the effect of the law's limits on age-based pricing.

Nationally representative surveys for the Kaiser Family Foundation have consistently found that young adults are more likely than senior citizens to say they would be willing to pay more so that more Americans could be insured.

Sebelius says insurers

can't exclude kids

WASHINGTON — Health and Human Services Secretary Kathleen Sebelius put insurers on notice Monday that the new health-overhaul law requires them to cover kids with medical problems, trying to dispel uncertainty over a much-publicized benefit.

The legislation's broad ban on denying coverage to any person on account of a health condition doesn't take effect until 2014.

The law can also be read to mean that if an insurance company accepts a particular child, it cannot write a policy for a child that excludes coverage for a given condition. For example, if the child has asthma, the insurer cannot exclude inhalers and respiratory care from coverage, as sometimes happens now. But the company could still turn down the child altogether.

"The industry seems to be saying, 'You didn't write it the way you meant it'; the government is saying, 'Yes, we did,' " said health-policy consultant Robert Laszewski, a former insurance executive.

"Now we need to see what the industry does," he said. "Is the industry going to fight this? It would create some real public-relations problems."

In a letter to America's Health Insurance Plans, Sebelius specified that children with a pre-existing medical problem may not be denied access to their parents' coverage under the new law. Furthermore, insurers will not be able to insure a child but exclude treatments for a particular medical problem.

"The term 'pre-existing condition exclusion' applies to both a child's access to a plan and his or her benefits once he or she is in the plan," Sebelius wrote, adding that her department will shortly issue a regulation to that effect. The new protections will be available starting in September, she said.

Also

Indiana is joining 13 other states in challenging the health-care overhaul in a lawsuit filed in a federal court in Florida. State Attorney General Greg Zoeller said Monday that Indiana will be added to an amended version of the suit targeting the law that's expected to be filed soon by the attorneys general of 14 states, including Washington.