Monday, October 12, 2009

Higher Premiums for Elderly Under Comprehensive Health Care Reform?

One of the central goals of comprehensive health care reform is to eliminate discrimination by health status in order to reduce the financial burdens associated with poor health. Congress has discussed eliminating health-status discrimination, although there is much debate about whether it’s fair to charge people who are different ages different rates for insurance. Older adults tend to use more health care, so the question becomes, is it fair to set higher premiums for the same coverage for older Americans?

The Urban Institute calculated the financial implications of age-based premiums under three different scenarios (5:1, 2:1, and 1:1) for households of different ages, incomes, and sizes. Some have proposed allowing premiums for the older adults to be as much as 5 times as high as those for younger adults (5:1 rating), while others would limit the highest premiums to be twice that of the lowest (2:1 rating).

They found that the affordability of health care costs (premiums plus out-of-pocket expenses after government subsidy) will be strongly related to the age-based premium rating.

The full analysis, Age Rating Under Comprehensive Health Care Reform: Implications for Coverage, Costs, and Household Financial Burdens Timely Analysis of Immediate Health Policy Issues, can be found here.

This analysis uses the Health Insurance Policy Simulation Model (HIPSM) to compare the financial implications of the premium rating choice

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