Insurers likely will raise premiums for young adults to compensate for the reform law's age rating provision, which limits the amount insurers can charge older members to only three times that of younger members, according to a new report from consulting firm Oliver Wyman.
The report predicts young adults aged 21 to 29 could see as much as a 42 percent increase in premiums for individual policies, while people in their 30s could see a 31 percent rate hike, reported LifeHealthPro.
"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 authors wrote.
Oliver Wyman's analysis, which was published in the American Academy of Actuaries' magazine Contingencies, confirms the fears of many insurers and state regulators that the lower age band could cause younger members to face sticker shock when the new prices are implemented. The higher prices, in turn, could persuade young adults to opt for paying the penalty of not having insurance, which starts at $95, or 1 percent of their income next year, according to the Wisconsin Reporter.
That concern led America's Health Insurance Plans to ask the U.S. Department of Health & Human Services to postpone implementing the age rating provision, reported The Hill's Healthwatch. "Higher rates for the younger population combined with low mandate penalties during the first years of the ACA implementation will result in adverse selection because younger individuals are likely to choose not to purchase coverage," AHIP wrote in comments to HHS.
"When these younger individuals do not enroll, destabilization of the individual market will occur, premiums will increase in the individual market for enrollees of all ages, and enrollment will decline," it noted.
But HHS Spokesman Fabien Levy told the Wisconsin Reporter that despite AHIP's worries, the reform law will indeed reduce healthcare costs even for young adults. "It's misleading to look at one provision of the law alone--taken together, the law will reduce costs," he said.