We had several bills and informational testimony presentations in both Public Health & Welfare, and Financial Institutions & Insurance. I have not been a fan of the Affordable Care Act aka as "ACA" or "ObamaCare." It is now Federal law and I will work to keep up with changes that help Kansas as well as those that hurt Kansas. With exception of the preexisting condition rules for kids and being able to keep your child on your policy until they are 26 years old the remaining parts of the plan will prove to be very expensive to everyone; rich, poor, young, and old. Lots of unintended consequences are surfacing as we get closer to the January 1, 2014 implementation date.
Kansas, like most states in the United States, currently uses a 5:1 insurance age rating band. Starting January 1, 2014 the new ACA law will require Kansas to compress our age band ratio to no greater than 3:1. This will negatively affect individual policy holders as well as small employer groups of 25 or less. Larger employer groups greater than 25 will not be affected. The 5:1 rating band strikes a delicate balance to provide some price protection for older consumers without making it impractical for younger consumers to purchase health care insurance. In a nut shell, the 5:1 rating band means an older person will not pay more than 5 times the cost of a younger person. Thus, if a 20 year old can purchase a health insurance policy for $100 per month, a 64 year old could purchase a health care policy for not more than $500 per month.
Requiring Kansas to change our rating bands from 5:1 to 3:1 will significantly increase costs for individuals aged 18-34 in both the individual market and the small employer market of 25 employees or less. Insurance Commissioner Sandy Praeger led the fight in the United States to keep the age rating band at 5:1 but her efforts fell on deaf ears. Most actuarial analysis in the United States show moving from a 5:1 age rating band to a 3:1 age rating band will increase health care premiums by 48% for individuals in the 18-34 age brackets. Individuals 18-34 years of age comprise the fastest growing segment of the uninsured.
Younger families and individuals will experience a rate shock in January of 2014. More than likely they will forgo obtaining coverage. As young healthier individuals drop health insurance the cost of health insurance sold through the health care benefit exchanges will spiral.
Two bills were introduced in Public Health and Welfare on Friday to give employers and individuals an alternative to the ACA plans.
- Senate Bill 162 would allow small Kansas employers to use a Health Reimbursement Account (HRA) to pay a portion of their employees' private individual insurance policy costs. This will also help make plans portable as they will be owned by the employee.
- Senate Bill 163 is known as Mandate Lite. It will allow Kansas based insurers to sell policies that do not meet the ACA guidelines and not require them to have any state mandates for additional insurance coverage over basic Health care coverage. The mandate lite plans will not satisfy the health care mandate required for individuals to have ACA compliant coverage. This means the individuals will have to pay the $95 penalty. Even with the penalty the Mandate Lite plans will be inexpensive compared to the 3:1 age rating plans required by the ACA.