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CAHI Defends Underwriting

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The Council for Affordable Health Insurance has released an analysis of the possible side effects of efforts to limit health insurers’ ability to reject high-risk applicants.

Merrill Matthews, executive director of CAHI, Alexandria, Va., prepared the report using results of an assessment done by Mark Litow, an actuary.

Many health reform advocates want “to require health insurers to accept every applicant, plus they want to charge everyone the same premium, or close to it,” Matthews writes. “And they claim these changes will only work if everyone is required to have coverage. The problem is that these changes, especially if people are given a choice of several plans and can switch periodically, will drive premiums significantly higher for everyone.”

In the Federal Employees Health Benefit Plan, for example, insureds who are sick can switch to more comprehensive plans during the “open season” period. “That ‘adverse selection’ makes the premiums in some plans significantly higher than they otherwise would be,” Matthews writes.

The health reform plan President Obama proposed during his campaign – with no underwriting, community rating, and no individual coverage purchase requirement — would cause coverage to cost about 2.2 times as much as it does today, Matthews predicts.

If an individual coverage purchase requirement were added, the cost of coverage would be about 1.95 times as much as it is today, Matthews writes.


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