Health bills target young-old cost gap

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By Jennifer Haberkorn

Young adults, a group that helped elect President Obama last fall, could have the highest costs to bear but the most to gain under the health care overhaul proposals in Congress.

The reform bills require insurance companies to reduce the disparities between what they charge the young and the old, with potential to dramatically raise prices for young adults.

But there are provisions that try to help provide coverage to young adults, such as tax subsidies.

"It works both ways," said John Holahan, director of the health research center at the Urban Institute. "They're disadvantaged with the more you move away from [the current price] rating, but more advantaged with income subsidies."

Young adults have often been overlooked in the battle to extend health insurance coverage to all Americans. They have the highest rate of uninsured status of all age groups, either because they can't afford it on fresh-from-college salaries or they hope that their age will save them from high-cost medical care. A 2008 study by the Kaiser Family Foundation found that young adults, ages 19 to 29, make up 29 percent of the uninsured population in the United States.

All of the reform proposals would require young people, and nearly all Americans, to have coverage.

The health care reform debate is expected to intensify in the coming weeks as the House and Senate bring their overhaul bills to their respective chambers.

Mr. Obama, in his weekly address on Saturday, called on lawmakers to rise above the politics and special interests to enact a strong policy.

"There are still significant details and disagreements to be worked out in the coming weeks. And there are still those who would try to kill reform at any cost," Mr. Obama said. "I urge every member of Congress to stand against the power plays and political ploys."

Health experts say that ensuring coverage of young people, who are typically more healthy than older folks, would help everyone. If and when uninsured young adults get into a car accident or face a catastrophic illness, any unpaid costs need to be picked up by the hospital or doctor, driving up costs for everyone.

The reform bills would regulate how much of a difference insurance companies can charge people based on age. Under current law, insurers have nearly free rein on age-based pricing and typically charge older people much more than young adults on the premise that their health costs are much higher. At the extreme, older folks are charged 11 times more than young adults, known as an 11:1 rating.

But in an attempt to regulate premium costs, proposals on Capitol Hill would limit that difference on a 4:1 or 2:1 basis. Democrats are divided on how low to go, and Republicans have put up some opposition to the 2:1 figure.

The original reform proposal in the Senate Finance Committee established a 5:1 rating, but in response to push-back from liberal Democrats, Chairman Max Baucus reduced the difference to 4:1. The House bill and the Senate Health, Education, Labor and Pensions Committee bill allows for a 2:1 rating, a proposal liberal Democrats favor.

Sen. John Kerry, Massachusetts Democrat, led the push for a 2:1 rating in the Finance Committee and is expected to continue it on the Senate floor.

"Allowing insurers to charge older Americans vastly higher premiums simply because of their age is discrimination, pure and simple," Mr. Kerry said. "Insurers must compete based on price, value and customer satisfaction, not by avoiding Americans based on their age or health."

Opponents of a low age-rating say that it would reduce costs for older people - from age 50 until Medicare kicks in at 65 - at the expense of young people.

But proponents say that much of the new costs young people would face would likely be picked up by tax subsidies that are being designed to help low- and middle-income people buy coverage.

The current plans call for subsidies to be available to individuals and families with incomes up to 400 percent of the federal poverty level. This year, that level is $10,830 for an individual and $22,050 for a family of four.