Young Adults Could See Steep Premium Increases in 2014 Under the Affordable Care Act.
NAIFA has begun working with industry partners to urge the government to remedy a provision in the federal health care law that would drastically increase the cost of health insurance for younger Americans.
The 3:1 age rating band set by the Affordable Care Act means that beginning next year insurance companies can charge the oldest people they insure no more than three times what they charge the youngest. A consequence would be that younger adults, who tend to be healthier, would see their premiums go up. A study by Oliver Wyman found that people aged 21 to 29 who buy individual coverage could see premiums jump by 42 percent.
Many young people would likely choose not to buy health insurance coverage even if they face penalties under a government mandate. This, the experts say, would result in higher average premiums for everyone over time.
At the very least, NAIFA believes the Department of Health and Human Services needs to phase in implementation of the 3:1 age rating band. Currently, 42 states have age rating bands of 5:1 or higher. An abrupt change to 3:1 could destabilize insurance markets and lead many younger people to drop coverage at the beginning of 2014. Under a gradual tightening of the ratio, younger people would see their premiums rise slowly over a number of years.
Ultimately, it seems even more prudent for Congress to amend the ACA to create a 5:1 age rating band that would impact far fewer young people and result in less drastic premium increases.