The health insurance industry is arguing that new health reform regulations just issued by the Obama administration will result in sudden and sharp cost increases for health care.
America's Health Insurance Plans criticized the Department of Health and Human Services on finalizing the age rating restrictions included in the health care reform law on Friday—a move they say will result in an "overnight increase" in coverage for young people.
"Coverage needs to be affordable for individuals and families in order to achieve broad participation in the health care system," AHIP President and CEO Karen Ignagni said in a statement. "The new restrictions on age rating will result in an overnight increase in health care costs for people in their 20s, 30s and early 40s. This increases the likelihood that younger, healthier people forgo purchasing insurance until they are sick or injured. When this happens, costs go up for everyone, young and old."
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The new restrictions on age rating take effect at the same time as the reform law's minimum essential health benefits requirement and the new $100 billion health insurance tax that will further add to the cost of coverage, Ignagni also argued.
In comments previously submitted to HHS, AHIP had urged regulators to delay implementation of the age rating restrictions to avoid significant cost increases for younger people at a time when the broader reforms are taking effect. These concerns were echoed by the National Association of Insurance Commissioners in their comments: "With a transition to the required 3:1 age ratio, younger, healthier individuals will experience more gradual rate increases rather than large one-time rate shocks and will be less likely to drop coverage and further destabilize the market."
But HHS said in final regulations Friday that it would not delay or phase in that requirement.
Under health reform, insurers are limited to the amount they can charge older people for their health insurance to a maximum of three times the amount younger people pay.
Supporters say the age rating restrictions are necessary to ensure seniors are fairly charged for coverage, but others argue the requirement will raise costs for young adults and lead them to forgo health insurance, which will negatively impact the entire market.
"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," 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."
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