NCPA - National Center for Policy Analysis


September 1, 2009

For years, insurers have charged older customers far more than younger ones, in part because of older residents' higher use of medical services, says Julie Appleby, senior correspondent for Kaiser Health News. 

For example:

  • Chris Denny, 27, of Santa Rosa, California, buys his own health insurance for $117 a month.
  • The same policy, from the same insurer, would cost a 60-year-old man $735 a month, according to an estimate at eHealthinsurance.
  • In this case, the insurance premium price ratio form the senior's perspective is 6.28 to 1.

The outcome of the age and insurance premium debate could affect tens of millions of people -- young and old -- who don't get insurance through their jobs and buy it on their own, as well as some small businesses.  It would not affect people who are covered by Medicare, or people who work for large companies, which usually get group rates for health coverage.

Lawmakers face a delicate balancing act involving fundamental issues of fairness and cost:

  • Limit insurers to charging only a small difference in monthly premiums between older and younger people, and the younger ones would likely pay far more than they do now.
  • Allow a larger spread, and older residents may be priced out of coverage, says Appleby.

Deborah Chollet, a fellow at Mathematica, a non-partisan policy research group in Princeton, N.J., says no matter what Congress decides, there will be people who can't afford coverage because they earn too much for subsidies but not enough to pay for insurance.

Requiring seniors to pay no more than five times what young people pay for insurance will cause more older people to be unable to afford coverage, while setting the ratio at 2-to-1 could leave out more younger people.  The question, she says, is which group does society want to help the most? "There really isn't a right answer here," Chollet says. "There's a decision to be made, but not a right answer."

Source: Julie Appleby, "Health Care Overhaul's Quandary: Costs vs. Fairness," USA TODAY, August 31, 2009.

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