KHN: Rate Shock Could Cause Young Adults to Opt Out of Health Insurance Coverage, Impacting Affordability

Kaiser Health News has an article out today about state insurance officials’ concerns that rate shock may cause some young adults to opt not to purchase health insurance, thereby driving up the costs for everyone else.

From the article:

  • “If young adults can’t afford health insurance policies available in 2014 under the health care law, state insurance officials are worried they won’t buy them.  And that could drive up the cost of insurance for the mostly older, sicker people who do purchase coverage.”
  • “That’s a potential problem even in states like California and Rhode Island, which are moving ahead to carry out the law, state officials told representatives of the Obama administration Friday at a meeting of the National Association of Insurance Commissioners. They said they’re concerned that young people facing insurance ‘rate shock’ may opt to pay a relatively modest penalty — $95 in the first year — rather than pony up thousands of dollars to purchase coverage.”
  • “’We are very concerned about what will happen if essentially there is so much rate shock for young people that they’re bound not to purchase [health insurance] at all,’  California insurance commissioner Dave Jones, told federal health officials. ‘It is a big problem for those of us, like in California, who are moving forward very aggressively to implement this [health law] and want to be successful.’”
  • “The law requires insurers to charge premiums to older beneficiaries that no more than three times what younger people would pay. The provision will control costs for those up to age 64 who may have expensive health conditions, but it also forces up rates for younger plan members.  That’s the way most insurance works, with cheaper members helping to offset the costs of more expensive ones.”

AHIP has launched “Time for Affordability” to raise awareness of provisions in the health care law that may impact the cost of coverage.

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