Health Care Reform Looks to Create Tighter Age Bands - Do You Know What That Means?
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The health reform debate in Washington has been confusing and contentious. There are many theories floating around about why that is, but it boils down to one central issue. There are no easy, everyone wins, answers in addressing the rising cost in health care. As a result, the American people have been fed a steady diet of concepts that are easy to understand, and half truths. Instead of debating the nuances of building a better health delivery and payment system, the choices are “government between you and your doctor”, or “heartless, greedy insurance companies leaving people to die”. Case in point, the concept of requiring all health plans to tighten the age bands on insurance premiums.
Insurance companies set premium rates based on risk. For instance, we all know how expensive auto insurance can be for a 16 year old boy. Put him into a brand new Ford Mustang, the premium climbs even higher. As that 16 year old gets older, holds a clean driving record, the price drops every year. Health insurance on the individual market often works the same way, only in reverse. Young, healthy adults have access to affordable health insurance, although they will see the cost go up as they get older.
Some States already have limits on how much premiums can increase, although most States do not. Even if there is never a significant claim against a health insurance policy, the premium could increase to five times the initial amount just based on increasing age. That really rubs a lot of policy holders the wrong way, and makes buying a policy for an individual in their 50’s rather expensive. President Obama spoke to this point when talking about folks who are discouraged from starting a small business, or retiring early because of health care premiums.
How is it fair that an insurance company can push a premium up on a policy holder who has been Read the rest of this entry »
