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Feds call for state age-curve information

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The Center for Consumer Information and Insurance Oversight (CCIIO) has put out the official listing showing how many separate rating areas each state and the District of Columbia can have.

CCIIO (pronounced “See-sigh-oh”), the arm of the Centers for Medicare & Medicaid Services (CMS) in charge of implementing many Patient Protection and Affordable Care Act (PPACA) programs that will affect the private health insurance market, put out the list in conjunction with a questionnaire that it will use to implement the PPACA “age curve” provisions.

The PPACA age-curve provisions state that, starting in 2014, a non-grandfathered carrier in the individual or small group markets can charge the oldest insureds only 3 times as much as they charge the youngest adult insureds.

Today, in some states, the maximum age ratio is about 5 to 1.

In a state that wants to use more than one state-defined geographical rating area for the individual market or the small group market, or both, the state will need information for each geographical rating area, according to the age-curve information questionnaire.

CMS has stated in final regulations that a state can divide itself into rating areas based on county boundaries, on three-digit ZIP codes, or on a division between metropolitan statistical areas (MSAs) and other areas.

CMS let a state keep the number of rating areas it established by any law, rule, regulation, bulletin or other executive action before Jan. 1, 2013.

If a state has not officially stated how many rating areas it wants, or it waited until after Jan. 1, 2013, to take action on the issue, the state can have “no more geographic rating areas than the number of MSAs in the state plus one,” officials said.

The jurisdictions that can have just two rating areas are Hawaii, Rhode Island, Vermont, Wyoming and the District of Columbia.

California can have the most rating areas — 27.

The other states that can have more than 20 rating areas are Florida and Texas. 

CCIIO has included a table with the questionnaire that shows that the default standard age curve established by the parent of CMS, the U.S. Department of Health and Human Services (HHS), would require insurers to charge children ages 0 to 20 a premium rate equal to 63.5% of the premium charged 21-year-olds.

Insureds ages 21 to 24 would get the lowest adult rate. Adult insureds would start paying more than twice as much as 21-year-olds when they reached age 53.

“The federal default standard age curve will be updated as needed but no more frequently than annually,” officials said.

States can set age rating ratio maximums lower than 3 to 1 but cannot set ratios higher than 3 to 1, officials said.

America’s Health Insurance Plans (AHIP) has argued that the age ratio limit could backfire, by sharply increasing rates for young, healthy insureds in some states and encouraging young people in those states to pay the new PPACA tax on the uninsured rather than buy health coverage.

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