Why age matters in health-care premiums

Why age matters in health-care premiums

The effects of the Affordable Care Act on insurance premiums will vary, but some people may see more advantages than others.

Chris Hennessey explains why some segments of the population may see a reduction in premiums.

Older individuals will benefit
Older individuals, particularly those with chronic illnesses, will likely benefit from the ACA. The new rule provides that individuals who have illnesses cannot be denied coverage, and they may see their rates go down. Adjustments have also been made to the way the community rating is calculated. Community rating is a system of setting a common price for insurance offered in a specific area. Under the ACA, premium costs can only be adjusted for age, geography, and tobacco use. In the past older people could be charged more than a younger person because the assumption is that they use more health care. Today, the ratio is reduced.

Women will be treated equally with men
Prior to the ACA, women were also charged higher premiums because they, on average, live longer than men and consume more health-care services. Under the ACA, however, that factor is neutralized and women and men are treated equally.


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