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Narrow Age Rating May Raise Premiums

Narrow Age Rating May Raise Premiums

Making age adjustments much restraining than five to one may dramatically hike premiums for the healthy and young. Narrow age rating may raise premiums, and so it could let young and healthy individuals forgoing their healthcare coverage. Recently, an analysis has found this fact.

Blue Cross and Blue Shield Association or BCBSA has just released this new data on the basis of analysis made by Actuarial and Health and Life Sciences practice by the Oliver Wyman. The key findings of the analysis are as below:

  • The data has shown that Narrow age rating may raise premiums.
  • It has also shown that the age rating ratio of 2 to 1 may raise insurance premiums for healthiest and youngest American people in the individual insurance market in most of the states by almost 50% in the initial year if compared with the age rating ratio of 5 to 1.
  • The analysis by the Oliver Wyman has also found that limiting age rating ratio to 3 to 1 may increase the premiums in most states by up to 30% for the younger individuals if compared to the ratio of 5 to 1.
  • The Oliver Wyman has evaluated that over a five-year time frame, over 1 million young consumers would get out from the insurance market which may result in a 10% increase in premiums for the individuals in certain parts of the nation.

At present, 42 states allow health plans varying insurance premiums on the basis of age by 5 to 1 or even more. The key benefit is that insurance premiums are maintained reasonable for the younger Americans to encourage broader participation. If more restraining age rating is imposed, young Americans may not opt for buying health insurance.

According to Scott P. Serota, the CEO and president of the BCBSA, a sustainable and reasonably priced insurance industry needs broader participation across every age group for maintaining much affordable rate of premiums. Narrow age rating may raise premiums. Since, the analysis has shown more restrictive age ratings regulations may discourage a wide part of those having individual insurance coverage. And, that may make coverage less reasonable and undermining the primary targets of nationwide healthcare overhaul. To maintain a long-term sustainability of healthcare overhaul, BCBSA will hit the proper balance on the age ratings to pass up disproportionately loading a single part of population over another. And, because of this reason, BCBSA supports 5 to 1 age ratings similar to what most of the states allow presently.

Serota said that young people are more sensitive than the older people, in regards to the costs of health insurance. The ultimate fact is that if the premiums are very high then healthy and young people will just not be interested for buying health insurance and their required cost subsidies for the sicker and older individuals would be lost; resulting in costlier healthcare for everybody.

The analysis done by Oliver Wyman by the BCBSA is available on the Blue Cross and Blue Shield's official website

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