I skimmed it. For people who don't want to invest even that much time: premiums increase with the age of the people covered, without a difference between men and women (which I thought we knew about, but it seems this guy didn't). Anyway, why is this interesting?
It's interesting because in the past there was no regulation on premium increases, so it was unpredictable what could happen year to year. Also it's interesting to note that premiums are basically priced by age and individuals now, so even if your kid is 26 it might be cheaper to kick him/her off and have him/her buy his/her own insurance on the marketplace.
That's still the case - policies were always priced by age. The unpredictable part of the price increase is based on health care costs increasing in an unpredictable way - that still exists and will cause policies to go up in unpredictable ways.
It's not clear to me that there is some associated regulation (other than not being able to price men and women differently). Granted I didn't read carefully.
And that means that uniform rate increases must be a feature of the Affordable Care Act, one I’m not sure too many people have noticed. I spent quite a bit of time looking to see whether anyone was discussing this and found nothing. And I asked my contact at Independence Blue Cross — he’s the vice president of sales — and he said he knew nothing about it. It actually took me more than a week of searching to dig up the applicable regulation, which was issued by the Department of Health and Human Services early this year. It is pretty obscure (see Page 8), but it applies to every plan offered in states using the federal exchange. (States using their own exchange, like New York, may have a different cost curve.)
No - what I'm saying is that there won't be uniform rate increases. There is a generally uniform rate increase for age - but that doesn't account for the entire rate of change. Nothing will change in how insurance rates work - they will still be based on how much the insurers are paying out as a whole, which is unpredictable. ACA may increase or decrease that rate of change (hopefully decrease it) but it doesn't change the basic structure of the industry.
Here's the relevant verbiage, I think, from a DHHS memo: http://www.cms.gov/CCIIO/Resources/Files/Downloads/market-reforms-guidance-2-25-2013.pdf [rquoter]II. The Default Federal Standard Age Curve Section 147.102(a)(1)(iii) states, as set forth by the statute, that the premium rate charged by a health insurance issuer for non-grandfathered health insurance coverage in the individual or small group market may vary by age, except that such rate may not vary by more than 3:1 for adults. Section 147.102(d) defines the standard age bands for rating purposes under section 2701 of the PHS Act as follows: From: Gary Cohen, Director, Center for Consumer Information and Insurance Oversight I. Purpose • Children: A single age band for children ages 0 through 20. • Adults: One-year age bands for adults ages 21 through 63. • Older adults: A single age band for adults ages 64 and older. Section 147.102(e) requires that, for age rating purposes under section 2701 of the PHS Act, health insurance issuers use a uniform age rating curve established by the state for the individual market, small group market, or both markets specifying the relative distribution of rates across all age bands. The rule also indicates that if a state does not establish or propose a uniform age curve by March 29, 2013 the federal standard default age curve would apply in both the individual and small group markets in that state for the 2014 plan or policy year. We published the federal standard default age curve in the November 26, 2012 proposed rule (77 FR 70584) and, in the preamble to the final rule, we indicated that we were not changing the default standard age curve from the proposed rule for states that allow a maximum 3:1 ratio for age rating. For states that adopt narrower ratios for age rating, the default age curve would take into account the permissible rating variation for age under state law. We are now establishing through this guidance that the federal default standard age curve that was published in the November 26, 2012 proposed rule is effective beginning in 2014 in states not specifying their own age curve. The federal default standard age curve is attached as Appendix I. The federal default standard age curve will be updated as needed but no more frequently than annually.[/rquoter] It looks to me that the regulation is setting an upper bound on the burden that old people take for their healthcare coverage by not letting them pay any more than 3 times that of the young people. And they allow states to reduce that burden further if they want. And there is a reference to a curve as well, so the relationship of price from one age to another would be consistent between all available plans. That's probably either wise or inevitable -- otherwise insurers may take a pricing strategy that is attractive to young, profitable customers and shifts old, expensive customers to other providers. This way all providers play by the same set of rules and can compete on price only by moving the whole curve up or down, not by bending it. Glad to have figured out what you were talking about. Still a little befuddled as to why this is interesting.
This is interesting because this is a huge improvement going forward for consumers worrying about random gargantuan increases to premiums
You're not understanding - the regulation only controls the relative rate from the cheapest to most expensive person. It doesn't stop insurance from going up a whole bunch if health care costs rise a bunch - and that's the cause of the random gargantuan increases.
thanks for reading through and explaining guys. This is a major part of cost control but as major states the medical costs have to be covered. One thing that I never see discussed on the subject in this forum is old people living longer. Its putting natural pressure on health care costs but they can't cover their share. Its the whole purpose of getting younger people in the system.
