Young adults’ insurance premiums will rise
April 1st, 2010 | by Brian Schwartz |From the Associated Press:
People younger than 35 who are buying their own insurance on the individual market would pay $42 a month more, according to an analysis by Rand Health, a research division of the nonpartisan Rand Corp.
The analysis, conducted for The Associated Press, examined the effect of the law’s limits on age-based pricing, not other ways the legislation might affect premiums, said Elizabeth McGlynn of Rand Health.
Jim O’Connor, an actuary with the independent consulting firm Milliman Inc., came up with similar estimates of 10 to 30 percent increases for young males, averaging about 15 percent.
For more on how ObamaCare exploits young adults, see Aaron Yelowitz’s post:ObamaCare: Still a Bad Deal for Young Adults at Cato. Michael Cannon, also at Cato, suggests an innovative product that could encourage young people to buy insurance:
While the Obama plan would force young invincibles to purchase health insurance, markets have developed insurance policies that can achieve the same result without coercion. Such policies pay a deferred dividend to customers who end up not filing any claims. The same miscalculation that causes young invincibles to underestimate their need for insurance also causes them to overestimate the probability that they will receive a dividend. Therefore, they insure.
Law professors Tom Baker of the University of Pennsylvania and Peter Siegelman of the University of Connecticut report these innovations are currently available in China, and were quite popular in life-insurance markets in the United States until they were demonized as a form of gambling. Lower barriers to market entry, including clear regulatory guidance about these products’ legality, would cover many young invincibles without the need for more government.
For more on this, see Tontines for the Young Invincibles in Regulation magazine and Baker & Siegelman’s op-ed on tontine health insurance in the New York Times.
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tags: community rating, exploitation, invincibles, medical technology and innovation, ObamaCare fallout, tontine health insurance
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