Health care issues: A premium cost generation gap

Health care issues: A premium cost generation gap

A look at key issues in the health care debate:

THE ISSUE: Should older Americans have to pay higher insurance premiums than younger Americans?

THE POLITICS: The double-edged sword of the health care debate is the so-called age gap in insurance premiums. Americans between the ages of 50 and 65 who purchase their own insurance typically pay much higher premiums than younger people. Once they turn 65, Medicare takes over insurance coverage and the premium difference is no longer an issue. Workers who get their insurance through large employers as a rule do not face that premium gap. But for those who buy their own, the difference in price can be 6 or 7 times higher for older workers than it is for the younger generation. The Obama administration and Democratic lawmakers want to reduce the premium price difference, as a handful of states already do.

WHAT IT MEANS: The simple business decision by insurance companies is clear: Older Americans typically need more health care. Requiring that premium prices be less disparate means younger people would have to pay higher premiums to make up for the loss of insurance company revenue. The insurance industry says a mandate to keep the difference in premium costs between older and younger workers at no more than 2 to 1 would drive premium prices up for those younger workers by as much as 59 percent. Pending legislation in the House and Senate would include tax credits — or subsidies — for low- and middle-income Americans to help keep premium costs at or below 12.5 percent of an individual’s income. That could help many young people, as could one Senate proposal that requires that all policies provide dependent coverage for sons and daughters up to the age of 26.

— Jim Kuhnhenn