Health Care Reform Shock: Premium Hike Up To 150%?

Maryland’s largest insurer has proposed hiking average individual rates by  25% next year — and up to 150% for younger enrollees — to meet Health Care Reform’s   mandates.
 Meanwhile, CareFirst BlueCross BlueShield proposed raising premiums for small  employer plans by an average 15%.   The proposed ObamaCare rates in Maryland, just the third state where insurers  have declared their intentions, reinforce concerns raised by actuaries that a  rate shock may be coming.
 While regulators in solidly Democratic Maryland will have their say before  hefty rate increases are approved, and they may be whittled down, CareFirst said  it’s already targeting a 0% margin, down from 3% previously.   The primary factor driving the increase is a shift to guaranteed issue, with  insurers no longer able to price policies based on health status.
 Health Care Reform’s  state insurance exchanges will be able to price a policy based on age, but the  law places a maximum 3-to-1 ratio between premiums for those nearing 65 and  those under 30 vs. the 5-to-1 that is common today.
  These changes, along with the availability of government subsidies intended  to make coverage affordable, will result in an overall sicker population in the  individual market. CareFirst expects average morbidity, an insurance measure of  disease incidence, to rise 25%.
A recent study by the Society of Actuaries lends support to CareFirst’s  contentions. The group projected that the national per-person cost of claims in  the individual market would rise by 32% due to Health Care Reform. In Maryland, the  actuaries projected an increase of more than 60%.   By comparison, in Vermont and Rhode Island, the two other states where  insurers have proposed Health Care Reform’s rate hikes, the actuaries projected modest  decreases in per-person claims.
In general, the actuaries concluded that companies with higher-cost members  would discontinue coverage. Meanwhile, those opting to remain uninsured would be  younger and healthier than the current uninsured population.   “Those most likely to sign up will need coverage the most,” said Joe Antos,  health economist at the American Enterprise Institute.
  For those who qualify for Health Care Reform’s  income-based subsidies, the rate shock  may be limited. But they still might experience deductible shock — particularly  those with income above 250% of the poverty level who get help with premiums but  not out-of-pocket costs.

This article, filed from Los Angeles, appeared in Investor’s Business Daily on Monday 4/29/13 oon htheir online and paper editions…and here is the link.


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