Another Take on the RAND Study

There is a great blog in Colorado “Colorado Health Insurance Insider” written by two self-described health insurance brokers.  The blog is a must read for all health insurance industry experts.  The bloggers have written extensively about the insurance market in Colorado specifically, and insurance market reforms more generally.  One particular post caught our attention — a post regarding the recently released RAND study examining the impact of leaving in place certain market reforms (e.g. guarantee issue and community rating) if the individual mandate is struck.  The blog post notes:

“…the RAND study predicts that average total premiums would be 9.3% higher without a mandate. But this is because they assume that the majority of people who would choose to forego health insurance (assuming there’s no mandate) would be younger, healthier individuals. Premiums vary sharply based on age (under the ACA, premiums for older individuals can be up to three times as high as premiums for younger people), so the average premium without a mandate would be skewed higher based on the fact that the average insured would be older.”

The post then goes on to compare premiums in Colorado’s individual market (medically underwritten) versus the group market (guarantee issue with no mandate).  The bloggers’ analysis concludes “There’s a huge range of options available, both in the individual and small group markets. But the premiums in the small group market for our family of four (parents in their 30s with two young children) would be roughly double what they are in the individual market.”

So the ultimately conclusion of the brokers:

“…if all continues as currently planned but with the individual mandate eliminated, I would expect premiums – in the long run – to be significantly higher than they would be with the individual mandate in place.”

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