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InsiderOnline Blog: March 2012

Robbing Young Peter to Pay Old Paul

In Indiana, health insurance premiums are going to go up drastically after Obamacare’s rules on private insurance markets kick in, according to an analysis produced for the state by Milliman. Under the new rules, insurers can no longer set premiums according to individual health risk. That means the healthy, who are typically younger, will have to pay more. Also driving up premiums is the government’s mandate that everyone buy insurance, a mandate that entails a benefits package larger than most insureds would buy on their own, per HHS diktat. Some of the results of Milliman’s analysis, as summarized by Grace-Marie Turner (National Review Online’s Condition Critical blog, March 21, 2012):

• By eliminating rating on health status, the ACA brings the highest risk to the general marketplace resulting in premium increases of 35 percent to 45 percent.

• The essential-health-benefit requirements will represent a benefit expansion for the individual market, forcing Hoosiers to buy coverage they may not want or need. This will increase premium rates by 20 percent to 30 percent.

• The increases in premiums are not equally distributed. On average, individual-market premiums will increase by 75 percent to 95 percent. However, these increases will be greatest for young healthy males due to the fact that the ACA eliminates premium rating based on gender and health status, and restricts premium rating based on age.

• Young healthy males at 250 percent of the federal poverty level (FPL), or $28,000 a year, can expect to experience almost a 100 percent premium increase even after the application of the premium tax credit. Young healthy males at higher income levels — 400 percent of the FPL and above, or about $45,000 a year — can expect to realize premium increases over 250 percent in 2014.

Posted on 03/22/12 04:32 PM by Alex Adrianson

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