|By TIM BRADNER, Alaska Journal of Commerce, Anchorage|
|McClatchy-Tribune Information Services|
Some provisions of the federal Affordable Care Act, like certain new taxes, took effect
That's when major parts of the federal act take effect, and a lot of the effects won't be pleasant.
The effects will be strikingly different on people in different age groups and income classes but the bottom line is that most individual policy premiums are likely to go up, some by substantial margins. If individuals or families are in moderate- to low-income groups and qualify for new federal subsidies, that will help greatly.
The individual policy market is a subset of the overall health insurance market, but the factors at play that influence costs may also influence other segments of the health insurance market, including group policies.
Here's the bottom line:
On average, premium costs may increase between 30 percent and 88 percent before federal subsidies are applied for those who qualify based on preliminary estimates, according to
The federal law sets the family income limit for subsidies at four times the federal poverty limit for
Depending on a family's income there are a wide variety of impacts.
However, if the couple exceeds the
The underlying costs of insurance, which will be reflected in higher premiums for many, are to be driven up by the requirements of the federal law, which will set certain minimum benefits and have other requirements such as no denials of coverage because of preexisting conditions.
While these requirements are popular with the public they still will add to costs.
They also tighten the range of risks and limit the flexibility that an insurer like
"Today we can match risk to the premium rate. We know there is less risk of health problems with a healthy 24-year-old compared to someone who is 64," Davis said.
Because there is less risk, the premiums can be lower. For the older person, who can usually expect more frequent health issues, premiums will be higher.
Davis said the range of risks currently can be as much as one to five, with a young healthy person at one (lowest risk) and paying the lowest amount, and an older person at four or five (more risk) and paying more.
The new federal health care act has the effect of squeezing this range "toward the middle," Davis said, because the minimum coverage and other requirements increase risks across-the-board.
Currently a younger person may be able to choose a "bare-bones" health plan that has lower premiums. But with the required minimum coverage and other new rules there will be less flexibility for bare-bones plans.
The effect of all this is that younger, healthier people will pay more for their insurance, some by considerable margins. Many older people may pay less. Who pays what will depend on individual circumstances and the effects are now hard to predict. Overall, most Alaskans, particularly those buying individual policies, are likely to pay more.
Another requirement in the federal law is that everyone must be covered by health insurance one way or another. This may seem desirable from a policy standpoint, because reducing the number of uninsured will help hospitals now stuck with uncollectable bills from those without insurance.
However, the requirement in the federal law that everyone be insured is very weak, particularly for young, healthy people, Davis said.
"There is a
As for group policies, another big uncertainty is how many employers of workers in low-wage industries may opt to drop coverage and move their workers into the subsidized exchanges. "It might mean less money paid out," for employers in spite of any federal penalties, Davis said.
This is something
"That would affect the cost" for maintaining the company's coverage, Davis said.
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