Higher Premiums – and Higher Deductibles: An Analysis of Health Plans on Offer in 2014
In the market for individually purchased coverage, the same amount of insurance (defined as a constant deductible and/or out-of-pocket maximum) costs substantially more in 2014 than in 2013. At average 2013 deductibles, the cost increase is 81 pct for a 21 year old, 29 pct for a 40 year old, and 64 pct for a 64 year old
Because of this, persons ineligible for subsidies may be less likely to purchase coverage in 2014 than in 2013, and if they do purchase coverage are very likely to have significantly higher deductibles in 2014 than in 2013
In some cases, eligible persons may receive subsidies that are sufficiently large to keep the net cost of a given level of coverage steady, or even to make the same level of coverage more affordable. We estimate that 21 year olds with incomes below 200FPL will find an equivalent plan more affordable in 2014 than in 2013, as will 40 year olds with incomes below 300FPL, and 64 year olds with incomes below 400FPL. I.e., persons below these age / income thresholds should find more value, and accordingly are more likely to be insured in 2014 than in 2013. Conversely, for everyone above these age / income thresholds, health insurance in the market for individually-purchased coverage will offer less value for money in 2014; accordingly these persons are more likely to be uninsured in 2014 than in 2013
Two of our findings have significant negative connotations for adverse selection: a) premium inflation for a given level of coverage is greatest for the young; and b) subsidies will be available for fewer young uninsured than for older uninsured (we estimate few if any subsidies go to 21 year olds with incomes much above 200FPL, or to 40 year olds with incomes much above 300FPL, but that subsidies will be paid to persons 60 and older all the way to 400 FPL). Very simply, price / value relationships in the market for individually purchased health insurance have deteriorated much more for younger (and presumably healthier) potential enrollees than for older (and presumably sicker) potential enrollees
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