If you’re in the ObamaCare exchanges, expect higher premiums next year. The reason, explains Grace-Marie Turner, is that the folks in the ObamaCare risk pool don’t look like the folks in a normal health insurance pool:
Pharmaceutical benefit manager Express Scripts found that enrollees in the ObamaCare exchanges are likely to be more expensive than patients in commercial risk pools. Its new study shows that enrollees in federal and state exchanges have a 47% higher use of specialty medications than in commercial plans in general. The rate for HIV medications in ObamaCare exchange plans is four times higher, and the proportion of pain medication prescribed was 35% higher than commercial plans.
While it was to be expected that those with more health needs would have a greater incentive to sign up for coverage, their higher costs will not be offset by the 40% of healthy younger people who the administration needed to enroll and pay disproportionately higher rates for their insurance. Only 28% of enrollees were in the coveted 18-34 age group. [Forbes, April 22]
This result is the one that you expect when regulations limit insurers’ ability to vary premiums by health status and the penalties for not signing up are small relative to the premiums. In short, it doesn’t pay for the young and healthy to sign up. Of course, higher premiums next year may induce even more healthy people to drop out.