The ACA and the Fountain of Youth

First it was Ponce de Leon and now it’s the ACA searching for the Fountain of Youth.   With 2014 here, implementation of the Affordable Care Act healthcare exchanges is underway.  Insurers cannot deny coverage based on health status. Insurers can charge higher rates based on age, but cannot charge any more than 3 times the rate of a young individuals.  These ratios may not adequately cover the risk. But, one of the premises under which the healthcare exchanges operate is that a sufficient number of young and healthy individuals, otherwise known as the  “young invincibles” will enroll in order to offset the enrollment of higher-risk insureds.  Insurers can keep rates relatively low if they charge roughly the same premium for all insureds but do not have to pay out as many claims on the “young invincibles.” Now that the exchanges are underway, insurers are focusing on the enrollment numbers of the “young invincibles.” In setting the 2014 premiums, the insurers estimated the number of enrollees by age.  As this chart from the Kaiser Family Foundation shows, the industry projected that 40 percent of all enrollees would be between the ages of 18-34. On Monday, January 13, 2014, the Department of Health and Human Services released numbers that show that the “young invincible” enrollment is off from projections.  The numbers show that through December 28, 2013, 2.2 million people enrolled in both federal and state health exchanges.  Of those 2.2 million, only 24 percent, or about 528,000, are between the ages of 18 and 34.  This is compared with 1/3, or about 732,600, who are between the ages of 55 and 64. There is now a campaign underway to increase the enrollment numbers of young people.  If sufficient numbers of young adults do not enroll, insurers could be forced to re-evaluate overall rates for 2015.  Furthermore, because each plan is based on state enrollment, each state will need to produce a sufficient number of young enrollees to prevent premium hikes in 2015. Larry Levitt, Gary Claxton and Anthony Damico, The Numbers Behind “Young Invincibles” and the Affordable Care Act. Kaiser Family Foundation. December 17, 2013.  

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