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Premiums To Rise 17% For Young Adults

From a suddenly awakened Associated Press:

[The child] Nils Higdon, 24, poses for a photo at his Chicago home, Sunday, Jan. 17, 2010.

Health premiums could rise 17 pct for young adults

By CARLA K. JOHNSON (AP)

March 29, 200

CHICAGO — Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans — a shift expected to raise insurance premiums for young people when the plan takes full effect.

Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press. The analysis did not factor in tax credits to help offset the increase.

The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.

Consider 24-year-old Nils Higdon. The self-employed percussionist and part-time teacher in Chicago pays $140 each month for health insurance. But he’s healthy and so far hasn’t needed it.

The law relies on Higdon and other young adults to shoulder more of the financial load in new health insurance risk pools.

What an outrageous lie. Mr. Higdon, being a mere child of 24 can be on his parents’ insurance.

Alternatively, Mr. Higdon can simply refuse to buy any insurance and pay whatever is 2% of his income (probably a very low figure) until he has an accident or contracts a disease.

“Young adults” will be leaving the risk pools in droves.

So under the new system, Higdon could expect to pay $300 to $500 a year more. Depending on his income, he might also qualify for tax credits.

At issue is the insurance industry’s practice of charging more for older customers, who are the costliest to insure. The new law restricts how much insurers can raise premium costs based on age alone.

Insurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old.

The rest will be shouldered by young people in the form of higher premiums.

Higdon wonders how his peers, already scrambling to start careers during a recession, will react to paying more so older people can get cheaper coverage.

"I suppose it all depends on how much more people in my situation, who are already struggling for coverage, are expected to pay," Higdon says. He’d prefer a single-payer health care system and calls age-based premiums part of the "broken morality" of for-profit health care

[O]n average, people younger than 35 who are buying their own insurance on the individual market would pay $42 a month more, according to an analysis by Rand Health, a research division of the nonpartisan Rand Corp.

The analysis, conducted for The Associated Press, examined the effect of the law’s limits on age-based pricing, not other ways the legislation might affect premiums, said Elizabeth McGlynn of Rand Health.

Jim O’Connor, an actuary with the independent consulting firm Milliman Inc., came up with similar estimates of 10 to 30 percent increases for young males, averaging about 15 percent.

"Young males will be hit the hardest," O’Connor says, because they have lower health care costs than young females and older people who go to doctors more often and use more medical services…

Some groups predict even higher increases in premiums for younger individuals — as much as 50 percent, says Landon Gibbs of ShoutAmerica, a Tennessee-based nonprofit aimed at mobilizing young people on health care issues, particularly rising costs…

We question the timing of this.

Where was the AP’s “analysis” when it might have mattered?

(Thanks to Mr_Bill for the heads up.)

This article was posted by Steve on Tuesday, March 30th, 2010. Comments are currently closed.

12 Responses to “Premiums To Rise 17% For Young Adults”

  1. mr_bill says:

    Can’t believe the AP published this

    Health premiums could rise 17 pct for young adults
    By CARLA K. JOHNSON (AP)

    Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans — a shift expected to raise insurance premiums for young people when the plan takes full effect.

    Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press. The analysis did not factor in tax credits to help offset the increase.

    The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.

    As it turns out “free” healthcare isn’t free! Who would have thunk it? Nerobama got a lot of his support from people in this age group. I wonder what their reaction will be? When reality comes knocking and the government forces their premiums to increase 20%, will they be screaming bloody murder? All that “change” is going to have to come from somebody’s pocket and these folks are going to finally realize it when the taxman comes knocking.

    Consider 24-year-old Nils Higdon. The self-employed percussionist and part-time teacher in Chicago pays $140 each month for health insurance. But he’s healthy and so far hasn’t needed it.

    He is doing it all wrong, he’s 24 so he’s a child and should be carried on his parents’ insurance. We all know 24 if far too young to have to fend for yourself. (/sarc) Nevermind that Alexander the Great conquered the entire known world by about the same age.

    The law relies on Higdon and other young adults to shoulder more of the financial load in new health insurance risk pools. So under the new system, Higdon could expect to pay $300 to $500 a year more. Depending on his income, he might also qualify for tax credits.

    http://www.google.com/hostednews/ap/article/ALeqM5hLAMW_KTqY_JVMQF-gNn3O0_uUcQD9EOIBQO0

  2. Media_man says:

    It will go up alot more than 17%. In NY State, where they have “guaranteed issue” (i.e. – no pre-existing conditions without an enforcable individual mandage, privately insured healthcare plans run $39,000 per year. Thus, there is no private insurance market to speak of. No doubt, this is the transparent intention of Obamacare. Legislate the private insurers into bankruptcy while demonizing them every step of the way. Once the smoke clears, single payer will ride to the rescue. Meanwhile, trial lawyers & SEIU goons run wild.

    A blind man can see what’s happening. Maybe we can put old people on ice flows and cast them adrift or haul them up a mountain and leave them there to freeze to death when they turn 70. That’s where we’re heading.

    • proreason says:

      100% correct

    • Dupree says:

      You are correct MM. The purpose of the story is found here:

      “He’d prefer a single-payer health care system and calls age-based premiums part of the “broken morality” of for-profit health care. ”

      The silly part of this statement is that if not for the age-based rating, they would blend all ages together, and that would raise his premiums way way more than just 17%. Age based rating is saving him money, because he is young.

    • proreason says:

      So, in addition to burdening future generations with crushing debt, now a huge hidden tax is slapped on them in the form of insurance premiums…over and above the other huge tax increases that are just around the corner…..plus out-of-control inflation.

      This is all so obvious that one would be a fool to believe that the Marxists are doing it unintentionally.

      And of course, they are not doing it unintentionally.

      Their purpose is to flatten the wealth creators in this country….of all ages…..and create such an unsustainable economic situation that capitalism will collapse.

  3. Rusty Shackleford says:

    At 18 I was out of the house, in uniform and serving my country, earning points towards a college degree..which I finished when I was 27.

    Funny how kids these days want to live at home and not do anything but cost money. Doubly funny how their parents let them.

    The welfare state begins at home. Whatever happened to parents wanting the kids to grow up, be productive and the parents able to live a quiet life and taking the grandkids once in awhile? Or is that not “cool” anymore?

    Maybe we have had too much freedom and it needs to be taken away so that this “up and coming” generation can see just how bad it can get rather than travel to such places during time of war and seeing it that way. The lazy way is to let it happen here, I guess. Well, hurray for that method. It’s certainly not cheaper, even if it is cool.

    (sarcasm)

  4. Rusty Shackleford says:

    Consider 24-year-old Nils Higdon. The self-employed percussionist and part-time teacher in Chicago pays $140 each month for health insurance. But he’s healthy and so far hasn’t needed it.

    And the bad part about this is what? THAT’S WHAT INSURANCE IS, YOU TWIT.

  5. Steve says:

    The real laugh here is that Mr. Higdon’s premiums are going to end up being the least he pays for his “free healthcare.”

    He and his fellow “young adults” will be paying for it for the rest of their lives.

    • confucius says:

      In 2008, 68% of the 18-24 age group and 69% of the 25-29 age group voted for Obama.

      Perhaps this is the change they’ve been waiting for.

  6. BobonStatenIsland says:

    Why spend $140 a month when you are 24 and perfectly healthy? If he just put that money in investments every month w/ minimal return he would be much better off ten years down the road, provided he never needs serious medical help, which he probably won’t. I would wager that the plan he has doens not cover dental nor optical which are the only things he would take advantage of in his youth. He can spend out of pocket and still save a fortune. The thing is, he would actrually have to save that money in case he needs it for health issues. If his rates never went up, which they would, in ten years he would save almost $17,000 with a minimal amout of interest. Of course, all this is a mute point now that the HealthCare Bill was passed.

    • mr_bill says:

      I’ve made the same argument many times. I think it’s wise for young people to carry a catastrophic policy (which is relatively inexpensive) and put the rest of the money away in an account that can be used to pay for occasional doctor visits, eyeglasses or contacts, dental check-ups etc. You can’t buy a policy that covers these things and spend less than you would pay out-of-pocket for the services, anyways. To me it makes sense but requires some self-discipline, a trait lacking in many of our young 26 year-old infants these days.


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