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 Health Insurance Premiums For Older Individuals to Increase Under Reform

Health Insurance Premiums For Older Individuals to Increase Under Reform


The healthcare reform bills passed by committees in the House of Representatives and the Senate have significant differences. These variations will have to be hammered out before a final bill is presented to both chambers in Congress. In general, the House's bill is more comprehensive and allows for greater public involvement in providing Americans with health insurance. Interest groups are vying for benefits in the bill, which will no doubt see budget cuts before it comes up for a general vote. Unfortunately, older Americans appear to suffer in both bills, due to proposed insurance regulations that will allow insurance companies to charge higher rates based on age. Many baby boomers are in this precarious age group: too young for Medicare, disproportionately suffering from layoffs in this terrible economy (therefore losing their employer's insurance), and often having pre-existing conditions that may prevent them from buying individual health insurance at all. Still, which version of healthcare reform passes will be of great consequence to older individuals.

Currently, insurance companies are not limited in how much they charge older people when underwriting policies. In that regard, either reform bill could be considered an improvement. Insurers would be allowed a 2-to-1 ratio in health insurance rates under the bill that passed the Education and Labor and Ways and Means committees in the House. This means that they can charge a middle-aged person up to twice as much as a younger person in similar health. The Senate Finance and Health Committees' bill would allow insurance companies to charge up to four times as much to insure an older individual. Lobbyists for the insurance industry claim that even the Senate's looser regulations will hurt their profit margins and raise premiums across the board. Trade group America's Health Insurance Plans is promoting a 5-to-1 ratio, and some studies back that up. Those experts claim that insurers could justify charging older, higher-risk patients up to seven times as much as a younger, higher risk patient. On average, older individuals do tend to use more health care services, get sick more often, and are more likely suffer from chronic conditions.

Even if they work for an employer that offers health insurance, middle-aged individuals will still pay higher health insurance rates. Estimates vary, but anywhere from 40% to 83% of Americans in private sector jobs work in small businesses. Companies employing a majority of older workers can pay 10-20% more to provide health insurance, passing the costs onto their employees. There is often a reason for this; insurers such as Blue Cross Blue Shield have found that medical claims increase by up to 2% for each year older a person gets. Since private insurers prefer to pay as few claims as possible, workforces with higher average ages (mid 40s or older) are less attractive markets. This problem compounds for small businesses, according to NPR. Unlike larger companies, businesses with under 1,000 employees don't have enough historical claim data available for insurance companies to make a fairer judgment. Age (and gender) become the determinants of insurance premiums as a result. Neither the House nor the Senate bill address this issue.

Why does there seem to be congressional agreement on allowing age discrimination in the health insurance market? One of the main priorities of this administration is to expand health care coverage to as many Americans as possible. Despite the above disadvantages in acquiring insurance, only 12.5% of 55-to-64 year olds lack health insurance. While that's a significant figure, it pales in comparison to the 30% of 19-to-24 year olds who are uninsured. Putting too much of the cost burden on young adults could make them even less likely to buy student health insurance. On the other hand, more middle-aged individuals have a family and household to support; if premiums become too high, they may have to cut back on other necessities. Even though charging older people significantly more for health insurance is touted as an unfortunate side effect of insuring more Americans, the Congressional Budget Office found that the House measure (with stricter regulations on age discrimination in the market) has the potential to insure 97% of the country, versus the 94% that would be insured by the Senate's plan.

There are many changes ahead for healthcare reform; both houses of Congress need to combine their bills into one that will be presented to the entire House and Senate. No doubt that there will be tons of debate and amendments when that time comes. Democratic Senator John Kerry is one congressperson against these provisions; he was quoted in the Miami Herald saying that "allowing insurers to charge older Americans vastly higher premiums"â"ÂÂwhen they are equally healthyâ"ÂÂ"simply because of their age is discrimination, pure and simple". As expected, senior citizens' advocacy groups also oppose these measures and plans to lobby against them. No matter what happens, it is unwise for baby boomers to drop their health insurance. Premiums may or may not decrease for older Americans, but suffering a serious medical catastrophe while uninsured could cost even more.

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