Obamacare premiums soar as much as 78% to help cover ‘essential health benefits’

October 29, 2014

A recent study conducted by an independent group, and reported by The Washington Times, looked at premiums for the following ages: 23, 30, and 63 both before and after the ACA law kicked in. They studied premiums across the US for men and women (nonsmokers with no children). New plans purchased on 1/1/14 must include unlimited benefits for all the 10 essential health benefits, defined by the law and HHS. In addition, the new plans cannot underwrite for medical conditions, charge extra premiums, waiver out or exclude conditions, or decline anyone based on health. The new plan premiums can ONLY be based on 4 items: a person's age, smoker/nonmsoker status, zip code, and number of dependents covered. (NOTE: The law says that insurance companies are allowed to charge up to 50% more for insureds that are smokers; pre-ACA insurance carriers charged around 25% extra to smokers on average, but could charge more or less without limits.) In addition, the law says that 'community ratings' are to be used (premiums based on regions, usually defined by counties) and that from the youngest insured adult (age 21) to the oldest adult (age 64) the premium difference cannot exceed 3 times. So if a premium for a 21 year old is $200, the premium for a 64 year old cannot exceed $600 for the same plan.

While the article suggests that the increased premiums for 23 year olds (an average of a whopping 78%) are due to the "extra" benefits required by the law, there is no mention of the guaranteed issue nature of plans or the 3 to 1 spread in premiums. Keep in mind, that older people typically have more health problems, take more medications, and probably cost the insurance companies a lot more money. If an insurance company starts with the premium for the older ages and for example sells plans that run from $400 - $900/month for a 64 year old, then they would just divide by three to get the premiums for the younger ages. (I did this with one carrier in IL, and is is EXACTLY one-third the price of 64 year old for the cost of a 21 year old.) So if they start with premiums for older individuals, doesn't it suggest that this alone will raise premiums for 20-something year olds?

Read more: Washington Times - Obamacare premium soar