OT: Health Premiums Could Rise 17 pct For Young Adults

[Guest guest]

*Tuesday 3/30/10*

Health Premiums Could Rise 17 pct For Young Adults

*By CARLA K. JOHNSON*,

*AP*

 

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 percent on average, or roughly

$42 a month, according to an analysis of the plan conducted for The

Associated Press. The analysis did not factor in tax credits to help offset

the increase.

 

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.

 

Insurers 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.

 

Higdon wonders how his peers, already scrambling to start careers during a

recession, will react to paying more so older people can get cheaper

coverage.

 

" I suppose it all depends on how much more people in my situation, who are

already struggling for coverage, are expected to pay, " Higdon says. He'd

prefer a single-payer health care system and calls age-based premiums part

of the " broken morality " of for-profit health care.

 

To be sure, there are benefits that balance some of the downsides for young

people:

— In roughly six months, many young adults up to age 26 should be eligible

for coverage under their parents' insurance — if their parents have

insurance that provides dependent coverage.

— Tax credits will be available for individuals making up to four times the

federal poverty level, $43,320 for a single person. The credits will vary

based on income and premiums costs.

— Low-income singles without children will be covered for the first time by

Medicaid, which some estimate will insure 9 million more young adults.

 

But on average, people younger than 35 who are buying their own insurance on

the individual market would pay $42 a month more, according to an analysis

by Rand Health, a research division of the nonpartisan Rand Corp.

 

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 percent increases for young

males, averaging about 15 percent.

 

" 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.

 

Predicting exactly how much any individual's insurance premium would rise or

fall is impossible, experts say, because so much is changing at once. But it

is possible to isolate the effect of the law's limits on age-based pricing.

 

Some groups predict even higher increases in premiums for younger

individuals — as much as 50 percent, says Landon Gibbs of ShoutAmerica, a

Tennessee-based nonprofit aimed at mobilizing young people on health care

issues, particularly rising costs.

 

Gibbs, 27, a former White House aide under President George W. Bush, founded

the bipartisan group with former hospital chain executive Clayton McWhorter,

now chairman of a private equity firm. McWhorter finances the organization.

The group did not oppose health care reform, but stressed issues like how

health care inflation threatens the future of Medicare.

 

" We don't want to make this a generational war, but we want to make sure

young adults are informed, " Gibbs says.

 

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.

 

Ari Matusiak, 33, a Georgetown University law student, founded Young

Invincibles with other Obama campaign volunteers to rally youth support for

health care overhaul.

 

Age rating fails as a wedge issue because the pluses of the new law outweigh

the minuses for young adults, Matusiak says.

 

" And we're not going to be 26, 27, 33 forever, " Matusiak says. " Guess what?

We're going to be in a different demographic soon enough. "

 

Nationally representative surveys for the Kaiser Family Foundation have

consistently found that young adults are more likely than senior citizens to

say they would be willing to pay more so that more Americans could be

insured. But whether that generosity will endure isn't clear.

 

" The government approach of — we'll just make someone get health care and

pay for someone else — definitely NOT what I want, " says Melissa Kaupke, 28,

who is uninsured and works from her Nashville home.

 

In Chicago, Higdon says he supports the principles of the health care

overhaul, even if it means he will pay more as a young man to smooth out

premium costs for everyone.

 

" Hopefully I'll be old someday, barring some catastrophic event. And the

likelihood of me being old is less if I don't have a good health plan. "

 

Copyright 2010 The Associated Press. All rights reserved.

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