Tuesday, September 15, 2015
Commonwealth Explores Ramifications of Higher Premiums for Older Adults
The Affordable Care Act (ACA) requires that health insurers make coverage accessible and affordable to all individuals, regardless of age, gender, or health status. Under the ACA, people age 64 and older cannot be charged more than three times as much as 21- to 24-year-olds for the same plan (this is known as 3-to-1 “rate banding”). In general, this rule reduces premiums for older enrollees, while raising costs for younger enrollees. While the goal of the regulation is to make insurance affordable for all age groups, critics argue that it discourages young, healthy people from enrolling.
Several recent proposals, including one offered by Senators Richard Burr (R-N.C.), Orrin Hatch (R-Utah), and Rep. Fred Upton (R-Mich.), would allow insurers to charge older adults up to five times as much as younger adults (5-to-1 rate banding) while simultaneously making other changes to the ACA. We analyzed the effects of relaxing the ACA’s rate bands from 3-to-1 to 5-to-1 while leaving other ACA provisions in place. We focused on marketplace plans and other ACA-compliant health plans in the individual market, and excluded plans offered by employers (which are regulated differently). We found that while more—mostly younger—people would become insured under 5-to-1 rate banding, federal health spending would increase and 400,000 older people, who tend to have more health problems, would lose coverage....