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PPACA: Age-Based Rate Differences Vary from State to State

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The individual health insurance price difference limits in the Patient Protection and Affordable Care Act of 2010 (PPACA) could lead to big increases in rates for some young consumers starting in 2014.

Analysts at GoHealth L.L.C. — the unit of Norvax Inc., Chicago, that runs the health insurance quote site — make that prediction in a summary of the results from a state-by-state look at coverage pricing.

The analysts found that the national average for premiums for a hypothetical 20-year-old were $87.91 per month. The premiums for a comparable 60-year-old were $339.42 per month. The rate for the older consumer was 386% of the rate for the 20-year-old, or 3.86 times as high.

The percentage differences for 20-year-olds and 60-year-olds ranged from about 146% in Vermont to 522% in Wyoming.

The median was about 492.5%. The gap ranged from 482% to 502% in 35 states.

Aside from Vermont, the only states with gaps roughly at or under 300% were Massachusetts, New Jersey, California, Hawaii and Minnesota.

Aside from Wyoming, the only states with gaps at or over 502% were Kansas, Delaware, Louisiana and Kentucky.

Narrowing the gaps might help 60-year-olds pay for coverage, but analysts note that 60-year-olds are much likelier to have health coverage than the young, “invincible” 20-year-olds are.

In states where the age-based rate gap is high, 20-year-olds are paying about $50 to $60 per month for coverage, Erinn Springer, a GoHealth representative, said in an interview.

In Vermont, the state with the narrowest gap, 20-year-olds are paying $259 per month for coverage, Springer said.

If young adult rates rise to the levels seen in Vermont, “will that reduce coverage among young adults?” Springer asked.

GoHealth analysts studied the age-based rate gaps in response to questions about the possible effects of PPACA rate differential restrictions.

Opponents of PPACA are fighting to kill the law in Congress and in the courts. If PPACA survives, takes effect as written and works as drafters expect, it will require health insurers to sell coverage on a guaranteed-issue basis starting in 2014. PPACA will forbid insurers from using consumers’ health information when setting individual rates, but it will let insurers charge the oldest customers 3 times as much as they charge the youngest customers.

PPACA also would require most people to have health coverage or else pay a penalty. PPACA calls for the government to provide subsidies for people earning less than 400% of the federal poverty level, or about $43,000 for an individual. The government would not help people earning more than 400% of the federal poverty level pay for coverage.

The GoHealth analysts used their own health insurance rate database to study how much individual health rates vary by age today. The GoHealth analysts sought rates for hypothetical males born on New Year’s Day in 1992, 1982, 1972, 1962 and 1952. 

The hypothetical consumers were healthy non-smokers, single with no dependents, and located in the same ZIP code as the state capitol building. The consumers were seeking a standardized benefits package, with a $2,500 deductible and a 20% coinsurance rate in most states. They wanted their coverage to start June 1, 2012.

The analysts made adjustments for some states where the standard package was not available. In Vermont, for example, analysts sought a plan with a $3,500 deductible. In Hawaii and New Hampshire, the analysts set the coinsurance rate at 0%.

No individual plans were available through for 60-year-old men in New Mexico, South Dakota or North Dakota. No individual quotes were available through the system for men living in Augusta, Maine, or Providence, R.I.


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