Health Care Pools: Let Youth Jump, Or Push Them? In drafting national standards on how health insurers should be able to use age to set premium rates, congressional committees agree that older people should pay more. But they differ widely on just how much. Ultimately, it comes down to how best to persuade young adults to get into the pool.
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Health Care Pools: Let Youth Jump, Or Push Them?

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Health Care Pools: Let Youth Jump, Or Push Them?

Health Care Pools: Let Youth Jump, Or Push Them?

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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One conundrum for Congress with the health care overhaul relates to how much people should pay in premiums based on their age. Lawmakers are trying to draft national standards. They seem to agree that older people should pay more, but they differ on how much more. And state by state, the rules for how insurers use age to set premiums vary widely.

From member station KQED, Sarah Varney explains the challenges.

SARAH VARNEY: Okay. So imagine you're at a pool party. It's a mix of people in the neighborhood: some older folks, some middle-aged, new parents with screaming babies, new college grads. They're all standing around in their bathing suits, itsy bitsy and the not so itsy bitsy.

Now, for health insurance to work best, all of those people need to get in the pool. Well, of course, the older folks jump in first.

(Soundbite of a splash)

VARNEY: They've got more health problems and really need the insurance. Then, the middle-aged people and parents with young kids jump on in. But the younger ones, the ones who are rocking the itsy-bitsy bikinis and board shorts, how do you get them to jump in, especially when the water looks really cold? That is exactly the problem Congress is trying to figure out.

Mr. LARRY LEVITT (Vice President, Kaiser Family Foundation): There's no magic involved in how you set premiums.

VARNEY: Larry Levitt is vice president of the Kaiser Family Foundation. He says you need the 20-somethings in the pool because they help balance out the cost of insuring older people who use more medical care.

Mr. LEVITT: You're still going to have to raise enough money for premiums to pay for the health care services that people use.

VARNEY: And just how do you do that? Should younger people pay less and older people pay more? Or should we share the costs since we'll all be old some day?

The bill passed by the Senate Finance Committee would allow insurers to charge older adults four times the amount it charges younger people. The House bill and the Senate Health Committee bill make a different choice: they would limit what insurers can charge older adults to two times the amount. The insurance industry strongly prefers the higher four-to-one multiple.

Alissa Fox, senior vice president of the Blue Cross Blue Shield Association, says the fear is if you make insurance too expensive for younger adults, they just won't buy it.

Ms. ALISSA FOX (Senior Vice President, Blue Cross Blue Shield Association): It's very important to have significant discounts for younger people so they purchase insurance.

VARNEY: But the insurance industry is leaving out a critical element, says Linda Blumberg, a researcher at the Urban Institute. She says the current health reform bills all provide subsidies for lower income Americans, and´┐Ż

Dr. LINDA BLUMBERG (Senior Fellow, The Urban Institute): The young adults tend to be lower income, so they really are buffered a great deal from the full impact.

VARNEY: Blumberg is more worried about middle-income older Americans, the 55 to 64 years old. After all, discounts for younger people mean surcharges for older ones, and those older adults are less likely to qualify for a government subsidy.

Dr. BLUMBERG: More than half of individuals in that 55 to 64 age group, with incomes between 400 and 500 percent of the federal poverty level, would have household health care financing burdens of over 20 percent.

VARNEY: Should I translate that? What she's saying is my mom, before she retired, would have ended up spending 20 percent of her income to buy health insurance. And because she earned too much to qualify for a government subsidy, she would be - how would she say this - up a creek.

Alissa Fox at the Blue Cross Blue Shield Foundation says to handle that problem, Congress should give special subsidies to older people with middle incomes. But Congress is already apoplectic about the cost of health reform and, according to several sources, has little appetite for giving subsidies to people who make a pretty good living, around $54,000 a year.

(Soundbite of a splash)

VARNEY: Can we go back to the pool for a moment? There are other ways of getting those young people in the pool.

Unidentified Man: You can push them.

VARNEY: That's right, you can push them by making the penalties for going uninsured more expensive than a basic plan. The current bills do include penalties, but many economists and the insurance industry claim they're not high enough to be effective. You can also require employers provide health insurance since the majority of uninsured young people are working. The bills differ on how strongly they do this. However Congress decides the issue, they could look to other countries that have universal health care and a private insurance industry. None of them, including Germany and the Netherlands, use age or any other personal characteristic to set premiums.

For NPR News, I'm Sarah Varney.

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