Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By N.C. Aizenman
The Washington Post
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.
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.'