Ft. Lauderdale, Fl USA
Health premiums may rise 17% for young adults buying own insurance
By Carla K. Johnson, The Associated Press
CHICAGO — Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans— a shift expected to raise insurance premiums for young people when the plan takes full effect.
Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That's when premiums for young adults seeking coverage on the individual market would likely climb by 17% on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press.
The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.
Consider 24-year-old Nils Higdon. The self-employed percussionist and part-time teacher in Chicago pays $140 each month for health insurance. But he's healthy and so far hasn't needed it.
The law relies on Higdon and other young adults to shoulder more of the financial load in new health insurance risk pools. So under the new system, Higdon could expect to pay $300 to $500 a year more. Depending on his income, he might also qualify for tax credits.
At issue is the insurance industry's practice of charging more for older customers, who are the costliest to insure. The new law restricts how much insurers can raise premium costs based on age alone. nsurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old. The rest will be shouldered by young people in the form of higher premiums.
The analysis, conducted for The Associated Press, examined the effect of the law's limits on age-based pricing, not other ways the legislation might affect premiums, said Elizabeth McGlynn of Rand Health. Jim O'Connor, an actuary with the independent consulting firm Milliman Inc., came up with similar estimates of 10 to 30% increases for young males, averaging about 15%. "Young males will be hit the hardest," O'Connor says, because they have lower health care costs than young females and older people who go to doctors more often and use more medical services.
Young people who supported Barack Obama in 2008 may come to resent how health care reform will affect them, Gibbs and others say. Recent polls show support among young voters eroding since they helped elect Obama president.
Jim Schreiber, 24, was once an Obama supporter but now isn't so sure. The Chicagoan works in a law firm and has his own tea importing business. He pays $120 a month for health insurance, "probably pure profit for my insurance company," he says. Without a powerhouse lobbying group, like AARP for older adults, young adults' voices have been muted, he says. He's been discouraged by the health care debate. "It has made me disillusioned with the Democrats," he said.