Despite concerns that the insurance industry won't survive in a post-reform market if insurers don't recruit enough young adults, a new study found even if only 25 percent of insurance pools are made up of young adults, costs would increase slightly.
The Kaiser Family Foundation study analyzed what would happen if only about half the amount of young adults enroll in plans sold on the health insurance exchanges as what the Obama administration wants. In that scenario, insurers would only have to increase premiums by 2.4 percent in 2015 to compensate for the lost costs.
"Premiums are not as sensitive to the mix of enrollment as fears about a 'death spiral' suggest, particularly with respect to age," Larry Levitt, a senior vice president for Kaiser Family Foundation, and his colleagues wrote in the study.
Rather, the key is for insurers to recruit enough healthy members--regardless of their age--to help offset the costs of sicker members. "It is important to attract the 'young invincibles,' but maybe with a greater focus on the 'invincible' part," Levitt said.
Although a 2.5 percent premium increase doesn't spell disaster for insurers, they generally operate profit margins of three percent to four percent. "When you're talking about profit margins around there, they might not lose money, but they might not make that much, either," Levitt said, according to the Washington Post's Wonkblog.
Meanwhile, a separate study from the Robert Wood Johnson Foundation found that the low enrollment so far in exchanges, mostly caused by the glitch-filled rollout, isn't necessarily a permanent problem. That's because the Obama administration's HealthCare.gov improvements, existing policy strategies, enrollment incentives and market competitiveness should help boost the amount of consumers who sign up in the future.
To learn more:
- here's the Kaiser study
- read the Washington Post's Wonkblog article
- check out the Robert Wood Johnson Foundation study