Saturday, March 2, 2013

Letting Insurance Benefit Everyone Regardless of Their Youth (LIBERTY Act)

Rep. Dr. Phil Gingrey (R-Ga) Introduced H.R. 544 on February 6, 2013

Last month, Rep. Dr. Phil Gingrey (R-Ga) introduced H.R.544 in order to challenge the age rating rules written into the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare.  Dr. Gingrey’s bill would allow the states, not the federal government, to determine their age-rating bands to prevent spiking insurance costs for young, healthy people that could propel them to leave the health insurance market in droves.

As called for by PPACA, insurance companies must limit the difference in health premiums due to age to a 3-to-1 ratio.  From an actual cost perspective, it can demonstrated through actuarial studies that the average 64-year old exceeds a 5-to-1 cost ratio, as compared to the average 21-year old.  To make up the difference, the costs will be subsidized by young people in the form of higher premiums, with some increases expected to be in the 30-40% range.

The LIBERTY Act allows states to determine the age discount in their insurance market.  Should a state fail to act, the legislation establishes a rating which better reflects the correlation between age and health care costs.  Click here to read Dr. Gingrey's 1/29/2013 Letter to Congress.

The bill’s chances in the Democratic-controlled Senate are uncertain. In today’s times, with younger people burdened at an unprecedented level by student loans, unemployment and under-employment, I can only wish that wisdom will prevail and H.R. 544 will be passed.

Until next time,

Andrew Herman
AH Insurance Services, Inc.

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