A computer glitch in the federal government's software will limit the amount of penalties insurers can charge smokers who obtain individual policies through federally facilitated health insurance exchanges.
The U.S. Department of Health & Human Services will operate a computer system that evaluates insurers' policies sold through the online marketplaces. But an error in the program prevents it from accommodating another reform law provision that prevents insurers from charging older members more than three times the amount of younger members, the Associated Press reported.
"Because of a system limitation ... the system currently cannot process a premium for a 65-year-old smoker that is ... more than three times the premium of a 21-year-old smoker," HHS said in a June 28 document addressing the issue. If an insurer tries to charge more, "the submission of the (insurer) will be rejected by the system."
In other words, insurers won't be able to impose as big a gap as they're allowed between premiums for younger and older smokers. That means insurers will either have to charge older smokers less than planned or charge young smokers more.
Since HHS admitted it could take at least one year to rectify the problem, insurers should consider alternative plans. HHS suggested insurers limit penalties across all age groups by, for example, implementing a 20 percent penalty for both young and old smokers.
"'We are aware of the issue," Robert Zirkelbach, a spokesman for America's Health Insurance Plans, told the New York Times. "But I can't speak to how insurers will respond to it."
Larry Levitt, an insurance market expert and senior vice president with the Kaiser Family Foundation, believes insurers will likely keep penalties low to incentivize more young people to enroll. But industry consultant Bob Laszweski disagrees, saying insurers probably will impose high penalties for both young and old members. "It's going to throw cold water on efforts to get younger people to sign up," he told the AP.