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ACA won’t slam young adults, health plan rater says

NEWS IN BRIEF — Posted April 29, 2013

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Another report has challenged assertions by health insurers that young adults will experience unreasonable premium hikes under the Affordable Care Act’s new age band formula.

The health system reform law prohibits insurers from selling nongroup coverage to adults 64 or older for more than three times the premiums they would charge to a 21-year-old receiving the same benefits. The new 3-1 premium ratio narrows the difference between what older and younger individuals typically pay for insurance now. America’s Health Insurance Plans estimated that costs for younger adults would increase under the new age bands out of proportion to the costs they incur in the system.

But HealthPocket.com, which compares and ranks health plans, determined that the ACA’s age-based pricing requirements were largely in line with the premiums individuals are paying now. The company analyzed more than 20,000 premium quotes for over 3,600 insurance plans in the two largest metropolitan areas in each state before coming to that conclusion.

What will drive premium changes is the ACA’s elimination of gender-based pricing, HealthPocket indicated. Currently, the average premium a 23-year-old man pays is about 20% lower than what a woman of the same age pays. Under the reform law, this means that “certain segments such as younger women will benefit from the prohibition, while younger men may pay more as a result,” said Bruce Telkamp, CEO of HealthPocket, in a statement.

A separate recent report from the Robert Wood Johnson Foundation and the Urban Institute concluded that ACA coverage expansion provisions would mitigate the effects of any increased premiums that young adults would pay under the new age-rating bands.

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