As they drew up the rates for 2014, insurance firms had to make educated guesses about how many customers would stay, how many new ones they would attract - and what the health conditions of those new members might be. Actuaries say the new rules on how much insurers may vary rates level the playing field, making premiums more of an average. Older buyers or those who had above-average health problems - and whose former rates reflected those problems - may find their premiums going down. Younger or healthier people, on the other hand, may find premiums going up, sometimes sharply. Under the new rules, consumers “are not paying based on their own health status, but an average health status,” said Robert Cosway, an actuary with consulting firm Milliman. “The positive side is that people in poor health won’t have to pay as much, but the way you get there is that people in better health have to pay more.”
Q. I don’t qualify for a subsidy, and my premium is going way up for what the insurer tells me is a comparable policy. Why is that?
A. Insurers base premiums on a number of factors, including medical inflation and the cost of implementing insurance rules. A report on the California market done by Cosway at Milliman estimated that medical inflation and changes from the health law could add about 30 percent to the average premium in California. The biggest chunk of the increase was attributed to insurers being required to accept everyone, even those who are ill. That requirement polls well with the public. But it makes insurers nervous because they can no longer reject the costliest patients. While consumers like George Anders of California says he supports the concept, he’s not happy that his current plan is being discontinued. Anders, a contributing writer for Forbes and author of a critique of HMOs called Health Against Wealth, said the premiums for a new policy that covers him, his wife and two children will about double, although his annual deductible may go down. “As a social policy, I’m glad to see everyone get coverage, but if you’re going to add cost to the system, I’d like to see it spread equitably,” perhaps through an across-the-board tax, rather than just hitting policyholders, he said.
Wed, Oct 30 2013