Monday, March 18, 2013
3:1 AND WHY THIS RATIO IS HUGELY IMPORTANT
As part of Health Reform (Affordable Care Act), one of the requirements is that insurance carriers can't charge the oldest members more than three times the cost of coverage of the youngest policyholders. What this means in a nutshell is that the younger, healthier, minimal users of health care are going to be paying as much as 40% more than they do now. With medical costs and insurance costs spiraling out of control, hitting the youngers with higher costs is simply going to make them stay out of the market, pay their penalty and get guaranteed issue coverage when they need care. We need the younger population getting coverage to offset the older users. If not, the majority of people with health coverage are going to be the older population and those who need it. So what this leaves us is less dollars coming in and more dollars being spent because now we will have guaranteed issue coverage and the older, higher users of medical care paying less to satisfy the 3:1 ratio. Currently, the "Liberty Act", HR 544 is being kicked around a bit. This would change the ratio from 3:1 to 5:1. This could potentially make it more attractive to the younger population and gain more premium dollars.