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Insurance Rate Shock Coming for Young, Healthy People

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2014 could prove to be a tumultuous year for health insurance rates.  Pennsylvania Insurance Commissioner Michael Consedine said as much when answering questions from members of the state House Appropriations Committee this week. 

Insurance Commissioner Michael Consedine

Insurance Commissioner Michael Consedine

Consedine says some segments of the population are likely to experience what he calls “rate shock,” upon full implementation of the Affordable Care Act next year.  “Ironically it’s most likely going to be young, healthy individuals who right now are getting the benefit of being young and healthy, and therefore that’s allowed in the underwriting process, and their premiums reflect that,” Consedine says.  “That rating formula goes away with the Affordable Care Act.” 

“You have it currently low for young people, and high for older and less healthy people,” Deputy Executive Insurance Commissioner Randy Rohrbaugh said, using a metaphorical seesaw analogy, “That seesaw changes.  Actually there will be winners and losers, and I think there’s going to be sticker shock on the side of the young, healthy people.” 

Sticker shock to the tune of 60% or more, Rohrbaugh estimates.

The theory, he says, is that any disruptions in health insurance rates will be short-lived.  However, he cautions that it could be a longer stabilization process should those young people opt-out of the health insurance system, and choose to take the penalty instead, under the Affordable Care Act. 

“It may take two or three years before that all will level through.”

State Insurance Department Plans Forums on Health Insurance Exchanges

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Health Insurance exchanges are a key part of the federal Health Care Reform Law.  Pennsylvania is in the process of deciding if it wants to develop its own, or leave it up to the federal government.

Operating its own Health Insurance Exchange, a one stop shopping opportunity for people and businesses looking for health insurance, would allow the state to design something that meets the needs of Pennsylvanians.  But Insurance Commissioner Michael Consedine says there are strings attached, such as the costs and the  long term requirements on the state in operating that exchange.

He says the federal government picks up some of the costs as the outset. However, the costs are eventually up to the state to cover if it runs its own exchange. If the federal government runs the exchange, Consedine says the costs are covered by the federal government.  However, a state based exchange would be tailored to the unique aspects of the state’s marketplace.

Consedine says the State Insurance Department is holding a series of forums to hear what the public thinks will make sense for Pennsylvania.  The forums will be held on Tuesday, August 9th at the Doubletree Hotel Pittsburgh/Monroeville Convention Center, on August 11th at the Crowne Plaza Liberty Convention Center in King of Prussia and on August 23rd at the Sheraton Harrisburg Hershey in Harrisburg.

You can pre-register at www.ins.pa.us.  You can also comment on line if you can’t attend any of the three hearings.

Consedine says if Pennsylvania does not have a state-based exchange ready or at least in the planning stages by 2013 under the current federal law, at that point the federal government would start to look at possibly operating the exchange for Pennsylvania.

He adds they are still awaiting a significant amount of guidance from the Department of Health and Human Services and the federal government in terms of the specifics of health care reform.  He says that includes the exchange design and the minimum benefit plan that would need to be offered as part of the exchange.