Study Predicts Health Law Will Raise Premiums On Young Adults

The study says a provision linking prices for older and younger patients could raise costs on the young.

Young adults will see higher health insurance premiums under the Affordable Care Act (ACA) because of a provision that links prices for older and younger patients, according to a new study.

Actuaries at management consulting firm Oliver Wyman predicted the law's age rating restrictions could mean a 42 percent hike in premium costs for people aged 21 to 29 when they buy individual coverage.

"This means that close to 4 million uninsured individuals … can expect to pay more out of pocket for single coverage than they otherwise would, even given the availability of premium assistance," study authors wrote.

President Obama's signature healthcare law limited the amount insurers can charge older people for their health insurance to a maximum of three times the amount younger people pay.

Supporters say age rating restrictions are necessary to ensure seniors are charged fairly for health insurance.

Critics of the law argue the requirement will raise costs for young adults and lead them to forgo health insurance, destabilizing the individual market for coverage.

The lead advocacy group for U.S. health plans recently petitioned the Health and Human Services (HHS) Department to delay its implementation of the 3:1 rule.

"Higher rates for the younger population combined with low mandate penalties during the first years of the ACA implementation will result in adverse selection because younger individuals are likely to choose not to purchase coverage," America's Health Insurance Plans (AHIP) wrote in comments to HHS.

"When these younger individuals do not enroll, destabilization of the individual market will occur, premiums will increase in the individual market for enrollees of all ages, and enrollment will decline."

Oliver Wyman's study predicted that people in their 30s purchasing single coverage will also see an increase in premium costs totaling 31 percent, while people aged 60 to 64 would see premiums increase by about 1 percent.

The study was published in the January/February 2013 issue of Contingencies, an actuarial publication, and distributed by AHIP.

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