Many young, healthy Americans soon could see a jump in their
health insurance costs, and insurance companies are saying: It's not
our fault.
The nation's insurers are engaged in an all-out, last-ditch
effort to shield themselves from blame for what they predict will be
rate increases on new policies they must unveil this spring to
comply with President Barack Obama's health care law.
Insurers point to several reasons that premiums will rise. They
soon will be required to offer more-comprehensive coverage than many
currently provide. Also, their costs will increase because they will
be barred from rejecting the sick, and they no longer will be
allowed to charge older customers sharply higher premiums than
younger ones.
Supporters of the law counter that concerns about price hikes are
overstated, partly because federal subsidies will cushion the blow.
The insurers' public relations blitz is being propelled by a
growing cast of executives, lobbyists, conservative activists and
state health officials. They increasingly use the same catchphrase -
"rate shock" - to warn about the potential for price surges.
Aetna chief executive Mark Bertolini invoked the term at his
company's recent annual investor conference, cautioning that
premiums for plans sold to individuals could rise as much as 50
percent on average and could more than double for particular groups
such as the young and healthy.
The danger of "rate shock" also has become the favored weapon of
conservative opponents of the law, repeated in a drumbeat of op-eds
and policy papers in recent weeks.
The argument is a powerful one because the success of the law
depends on enough people signing up for insurance, particularly
healthy people. The issue is surfacing as the most recent
significant challenge in implementing the health care overhaul.
Supporters of the law complain that the warnings amount to a
smear attack by special interests and political partisans, akin to
earlier claims that the law would allow bureaucrats to deny life-
saving care to save money.
"'Rate shock' is the new 'death panels,'" said Wendell Potter,
a former head of communications for the health insurer Cigna who is
now a critic of the industry. "They've chosen these words very
carefully to scare people. It's the ideal term for what is, at its
core, a fear-based campaign."
Yet even analysts who favor the law concede that it will result
in higher costs for some young, healthy people.
Most of the new rules that could push up premiums will not apply
to plans sponsored by large employers, only to those sold to
individuals and small businesses. These policies will be available
on insurance marketplaces, or "exchanges," that the law sets up in
each state beginning in 2014, and that are ultimately expected to
serve about 26 million people.
The law will require insurers to offer a generous package of
benefits for exchange plans, including coverage of maternity care,
prescription drugs and treatment for mental illness. It also caps
customers' out-of-pocket expenses.
Many 20-somethings who buy their own insurance have plans that
are considerably skimpier. So, under the new law, they will be
getting and paying for more, whether they want the added coverage or
not.
Another key driver of higher prices: Insurers no longer will be
able to turn away or charge more to people with pre-existing
conditions. Perhaps most significant, insurers will be allowed to
charge their oldest customers only three times as much as their
youngest. In most states, older customers are paying at least five
times as much.
The result: The price of a policy for a young, healthy man in -
for instance, Milwaukee - could triple from $58 per month to $175,
according to a survey of insurers released by Douglas Holtz-Eakin,
president of the American Action Forum, a center-right think tank,
and a former director of the Congressional Budget Office.
Insurers argue that such increases could prompt many healthy
young adults to opt out of coverage, skewing the insurance market so
heavily toward the old and sick that it implodes.
The trade group America's Health Insurance Plans is lobbying for
the delay or suspension of some of the stricter standards that could
increase rates.
"We want the system to be affordable because we want people to
participate," said the group's president and chief executive, Karen
Ignagni.
Supporters of the law note that it will provide many people with
income-based federal subsidies to help buy insurance and say this
will more than offset the impact of the higher rates.
Surge
Insurance companies predict rate increases on new policies they
must unveil this spring to comply with President Barack Obama's
health care law, saying the price surge could lead to 'rate shock.'
Skewed
Insurers argue that such increases could prompt many healthy
young adults to opt out of coverage, skewing the insurance market so
heavily toward the old and sick that it implodes.
