Age Impacts Insurance Premiums, but How So?
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There’s no doubt that health insurance premiums rise with age.
But a helpful new report out shows consumers how that works exactly, and how the new health care law turns the health insurance premium market on its head, especially for younger consumers.
Don’t sell insurance premiums short. Today’s gross domestic product number—the benchmark the U.S. Commerce Department uses to take the temperature of the economy—was a disappointing 2.2% for the first quarter.
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The fourth quarter of 2011 saw GDP grow by 3.0%, and economists had expected the Q1 number to come in at 2.6%.
With the economy slacking off so far in 2012, getting a better grip on always-pricey health insurance premiums is not a luxury, but a necessity.
That’s where GoHealthInsurance, an online health insurance price comparison site, says it can help. The Chicago-based company has just released a new study detailing how health care insurance premiums grow “exponentially by age” and how the Affordable Care Act, if it survives Supreme Court scrutiny, can change the health care premium picture for the long haul.
“We knew age affected premiums, but we were interested to see exactly how much on a state and nationwide level,” Mark Colwell, consumer marketing manager at GoHealthInsurance explains in a statement. “Before health reform kicks into full effect 2014, pending the Supreme Court decision of course, every state has their own laws that govern how insurance companies set price by age. What we wanted to do with this study is offer consumers a look at how health insurance rates differ today and what to expect after 2014.”
How do health care premiums break down by age-group? The GoHealth study breaks down the data for health care consumers from ages 20 to 60, in all 50 states. Here’s what the study found (directly from the study):
Between ages 20 and 60, health insurance premiums for plans with similar benefits for men increase 288.3% on average across the nation, and in certain states, as much as 421.9%.
A 60-year old male will pay more than $4,000 a year on average in the individual health insurance market, while a 20-year old male will pay around $1,050 on average.
The GoHealth data says the days of affordable premium payments for younger Americans may be a thing of the past if and when health care reform kicks in (primarily in 2014).
With what federal regulators call the “Three-to-One” ratio, health care insurance providers won’t be able to slap older adults with premiums that are more than three times higher than the premiums they charge younger adults. That will significantly change the way insurers charge premiums, and virtually guarantee that young adults are facing higher insurance premiums under the proposed new health care laws.
Capping the rates that older Americans can be charged for health care insurance is just one facet of the complicated heath care law. But in this instance, it’s not all that complicated. To keep costs lower for older consumers (who politicians know vote more often), politicians are essentially picking the pockets of younger consumers to balance the health care premiums table.
Cynical? Maybe. Good politics? Probably. Cheaper for older Americans? Definitely.