The reason: Age band adjustments, which per the Patient Protection and Affordable Care Act will not allow insurance companies to charge the elderly any more than three times what they charge the young for the same coverage — an age band of 3:1.
That's an overall constriction, and a pretty big one. According to America's Health Insurance Plans, 42 states currently allow age bands of 5:1 or higher, and Pennsylvania is among them.
Exactly what that means monetarily depends on who you ask, but there are a lot of voices saying that in individual and small-group markets, premiums for young people are going to spike. AHIP predicts that the age band adjustment alone will increase a 24-year-old's premium 45 percent from $1,200 to $1,740 annually, while a 60-year-old's premium will decrease 13 percent, from $6,000 to $5,220 annually. However, the Kaiser Family Foundation predicts that the age band changes will be bigger in the individual market than in the small-group one.
The age band adjustment is just one of the changes that 2014 will have in store for insurance, as PPACA narrows the list of factors that insurers may consider to exclude pre-existing conditions, health status and gender; insurers are required to meet essential health benefits and minimum actuarial value standards for some plans; several new taxes come into play; and individuals and small employers gain the ability to purchase insurance via exchanges.
Forbes.com quoted Aetna Inc. CEO Mark Bertolini on what effect he expects those changes to produce: "Premium rate shock for 2014, absent subsidies and everything else, is going to be in the neighborhood of 20 percent to 50 percent. And we're going to see some markets (and) in sub-segments in some markets go as high as 100 percent."
By contrast, the Commonwealth Fund, issuing a recent historical overview of premiums, made no mention of impending spikes but opined that, long-term, "The Affordable Care Act's reforms should begin to moderate costs while improving coverage."
OK, back to the issue of youth. Age banding isn't the only pertinent health insurance issue: There's also the much-touted "You can stay on your parents' insurance until you're 26!" provision that has been in effect for a while now (I recently stumbled upon this article by a Carlisle resident on the subject), and the stipulation that people under 30 may purchase what will essentially be catastrophic-only coverage on the exchanges.
How effectively those factors counterbalance the age band restriction, I don't know. But putting them aside, I as a young person have a hard time not seeing age-band restrictions as a win for previous generations at the loss of my own and future generations. And we have quite a few of those already.
AHIP didn't mention that specifically, but it did note a related concern: "If the younger individual's premium becomes unaffordable, they will choose not to purchase coverage. If young, healthy people drop health insurance coverage, premiums rise for everyone."