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TheStreet Open House

Young Americans Will Not Bear Cost Burden Of Covering Older Americans Under Health Reform

Reason Given By Insurers for Expected Higher Premiums Is Not Founded

SUNNYVALE, Calif., April 11, 2013 /PRNewswire-USNewswire/ -- A new health insurance pricing report from HealthPocket, Inc. shows that current premiums are already largely in line with the Affordable Care Act's (ACA) age-based restriction on pricing, and insurer claims of related price increases for young people due to the restriction are unfounded. At the same time, gender-based pricing equality required by the health reform law will have a significant effect on pricing in most states.

Currently in most states, a health insurance premium is based on age as well as other factors such as gender, health, and smoking status. However, starting in 2014, the ACA will limit how much a health plan can charge in regards to age, with the oldest not paying more than three times the premium amount of the youngest that live in the same region and share the same status as smokers or non-smokers.

The study shows that average premiums across the nation increase 260 percent for 63-year-olds versus 23-year-olds under current plans, well under the 300 percent cap allowed under the ACA. Fourteen states currently exceed the ACA cap with the four highest above 350 percent of the limit including Alaska, Delaware, Oregon, and Wyoming.

"The biggest unknown right now for healthcare consumers is how health reform will affect what they pay for health coverage starting in 2014," said Bruce Telkamp, CEO of HealthPocket. "It is encouraging to know that age rating requirements in the health law will not be a major driver of increases to premiums."

The HealthPocket report also found the average premium for a 23-year-old man was nearly 20 percent less expensive than the average premium for a 23-year-old woman. The ACA will eliminate gender distinctions so a same age male and female nonsmoker in the same city will pay the same rate.

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