nos-trum. pronunciation: \nos'-trum\. noun. Etymology: Latin, neuter of noster our, ours.
1. a medicine of secret composition recommended by its preparer but usually without scientific proof of its effectiveness.
2. a usually questionable remedy or scheme.
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Wednesday, March 31, 2010

Poison Pill Of The Day: HC Premiums To Increase For Young Adults

Poison Pill #8:  The health care reform law limits age differences in premiums, so young healthy adults will pay about $500 a year more.

Rand Health, a division of the non-partisan Rand Corporation, performed an analysis of the new law's effect on re-distributing premium costs, as reported by the Associated Press (Mar 29).

Actuarial data shows that insurance companies charge older policyholders 5-6 times what they charge to young adults.  This actually underestimates the difference between what a young person consumes, and what a senior citizen needs, in annual outlays for medical care.  Figures I've heard are in the "10-20 times a younger person's cost" range.

There's an old saying that "90% of a person's lifetime healthcare cost is incurred in the last year of life."  That's the period when more complex and expensive care is provided in order to postpone the decline in health.

These are just "facts of life."  Enter the US Congress, who limited the ratio between what an older person pays to what a young adult pays to 3:1 in the health care reform law.  That shifts a big load of senior health care onto the young healthy population.  The only reason the annual increase is only $500:  there are many more young people than old people.  Imagine what a single 28 year old would have to pay to make up the difference for a single 70 year old.

Since it appears that there are ways for people to game the system and not pay for insurance mandated by the law, there won't be enough money coming in to pay for everybody.  Apparently the IRS is going to enforce the requirement, but only to the extent of what you report on your tax return.  If you buy insurance just before tax time, then you file as having complied with the law.  More on this subject at a later date.

If not addressed, cost is going to undo all the good things about health care reform.

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