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Big premium hike? Blame it on the kids

Courtney Perkes, Kaiser Health News on

Published in Health & Fitness

The new age-related rule applies in most states. However, seven states -- Alabama, Massachusetts, Minnesota, Mississippi, New Jersey, Oregon and Utah -- plus Washington D.C., do not follow the federal rate-setting formula because they have their own.

The U.S. Department of Health and Human Services (HHS) said it revised the way premiums for people under age 21 are calculated to better reflect the cost of medical care for children. The change will also "provide a more gradual transition" to pricier adult rates, the agency said.

Under the previous ACA age calculations, turning 21 ushered in an adult rate with a steep 57.5 percent increase. Adult rates then typically increased incrementally each year to reflect the higher medical costs associated with aging, though they are eventually capped at three times the rate of a 21-year old to promote affordability for seniors.

The formula for calculating annual increases for adults older than 21 will not change.

Under the new rule, health plans can charge a one-time 20.5 percent increase next year for children 0 to 14. For kids ages 15-20, rates will increase every year, starting with a sharp hike in 2018 followed by much smaller ones after that.

For 2018, the increases range from 31.2 percent for 15-year-olds to 52.8 percent for 20-year-olds. Those hikes are already baked in to the premiums insurers have set for their 2018 offerings. And they are related only to age -- there may be additional increases to cover the overall rise in medical costs.

Although the rate hikes are bigger for 15- to 20-year-olds, medical expenses for infants are actually higher, according to the nonpartisan Health Care Cost Institute in Washington, D.C. They drop after age 3, then rise again during the preteen and teenage years, according to the institute.

HHS said a single rate category for children ages 0 to 14 makes sense because it "spreads the cost of newborns, avoiding significant premium increases for families with young children."

As a result of the sharp one-time increase in 2018, a customer turning 21 the following year would face an age-related bump of only 3.1 percent rather than the 57.5 percent jump that would have applied under the old rule, according to the HHS' revised rate formula.

Some insurance agents predict the bump in charges for kids will only add to a generalized sense of anxiety about higher premiums, particularly given President Donald Trump's recent move to cut off federal payments for a key consumer subsidy, his administration's decision to shorten exchange open-enrollment periods in most states to 45 days, and Congress' failed attempts to repeal Obamacare.

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