The Conversation

Insurance Companies Concerned over Lack of Young, Healthy Enrollees in Exchanges

One of the fundamental elements of Obamacare requires that the risk of unhealthy and sick participants is mitigated on the backs of the young and healthy.  If enough younger and healthy people do not sign up for the program, there is nowhere to put the cost of covering those with expensive medical conditions. 

In fact, risk is the wrong word because there is little to no probability of sickness but rather an actuality as insurance companies can no longer exclude people who will cost more in services than they will ultimately put into the pool of insurees.

The result is that premiums will have to rise for the heretofore uninsurable, thereby undermining the purpose of providing affordable care. It is called the Affordable Care Act for a reason. "Insurers have warned that they need a wide range of people signing up for coverage because premiums paid by adults in the younger and healthier group, between 18 and 35, are needed to offset the cost of carrying older and sicker customers who typically generate far more in medical bills than they contribute in premiums."

Not surprisingly, signups for the new program are people "desperate for coverage." The state figures are alarming. In California, "most who applied were older people with health problems" according to a state official. Kentucky reported that around 3 of 4 enrollees are over the age of 35.  In Ohio, most of the enrollees are "older residents who lost their jobs and health coverage during the recession."

Financially, the numbers are obvious.  Nicole Kasavian Evans of the California Association of Health Plans explained that someone in their 60's uses $6 in services for every $1 they put into the system.  When you consider that spread, the inclusion of young healthy people is all the more urgent and insurance companies must corral younger, healthier folks into the system.  But it is a vicious circle: rates will have to rise to cover the greater liabilities but higher rates will dissuade people from joining the system. 

The latest attempts to lure younger, healthier folks with "hip" ads like "saving money on flu shots leaves us more money for fun shots," or attracting women with "promises of free birth control pills" facilitating casual hook ups has yet to be seen.  Unless the costs of insuring costly participants can be spread around, insurance companies will shutdown or raise rates to unsustainable levels. Aetna Chairman and chief executive Mark Bertolini said last month that it was "incredibly important" to get the exchange websites running properly because "the younger, healthier people aren't going to give them more than one shot."


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