“If you are young and healthy, get ready to pay more for health insurance when the Affordable Care Act goes into effect next year, Humana CEO Bruce Broussard said Thursday.
In a speech before the Rotary Club of Louisville, Broussard blamed a new “3 to 1″ ratio that will take effect in 2014.
According to the government’s health care website, the ratio limits the gap between what insurers charge to older customers, who use more health care, and what they charge to younger customers, who use less. Currently the ratio is 5:1 in 42 states, including Kentucky and Indiana, according to the health insurance industry’s lobbying group.
Here’s how Broussard explained it:
The public today is probably under a misconceived notion that health care is going to go down. And we think that insurance is actually going to go up — and the reason being, is because of the way the pricing model being is set today, where there is a 3 to 1 ratio. So your lowest price, is only, can be, three times higher (sic) than your than your highest price, and everyone gets insured.
So what that means is, the young (and) healthy are going to be subsidizing the older (and) unhealthy…I don’t think public realizes that over the coming year, and I think there is going to be some press that is going to be around how much people’s insurance is going to change over the coming year. And we’ve heard statistics all the way from 40 percent to 70 percent, depending on where you are as an individual.
The health insurance lobby gives an example of a hypothetical 24-year-old paying a premium of $1,800, up from $1,200, to subsidize a 60-year-old payer whose premium would decline from $6,000 to $5,400.
The government’s health care site says: “These proposed rules standardize how health insurance issuers can price products, bringing a new level of transparency and fairness to premium pricing.”
A spokesman for the U.S. Department of Health & Human Services, who declined to be quoted by name, said the law must be viewed in its totality: Young people can stay on their parents’ plans until age 26; insurers must spend 80 percent or more of their premium revenue on care instead of administration; the individual mandate will give the insurers more customers; and government-run marketplaces for policies will increase competition and drive down costs.
Given all those provisions, the law will slow the growth of health care costs, he said. (Not actually bring costs down, but cause them to grow at a slower pace.)
Broussard is not entirely negative on health reform. He noted the law will result in more individuals getting insurance. But he said 2014 will be a “bumpy road” for the health care system because of massive changes coming on at once.
For example, insurance companies are “waiting with bated breath” to find out the details of the state-run health insurance exchanges that are being set up as part of the law, he said.
”We’re supposed to do something in nine months and we’re not knowing what we’re supposed to do,” he said.”