Health reform backers fear jump in cost of coverage

Affordability » Rate hikes, driven up by the law, threaten to cause a backlash.

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The requirement was a top priority of the influential AARP. It is designed to make insurance more affordable to a group that often most needs insurance. But as rates come down for older people, they may increase for consumers in their 20s, regulators worry.

If that happens, young, healthy people could elect not to get health insurance and pay the small penalty in the law for not having coverage.

That, in turn, would leave an older, sicker population in the insurance pool, a phenomenon that typically inflates premiums.

To avoid so-called rate shock, regulators in California, Oregon, Rhode Island and other states have asked the administration to phase in the new requirement over several years.

"It’s not an issue of whether we should get there. We should," said Oregon Insurance Commissioner Lou Savage. "We just want to make sure that healthy people don’t leave the market."

Administration officials have said they cannot postpone the rule because the law requires it to go into effect in 2014.

They point to provisions in the law designed to shield consumers in their 20s from higher premiums. Those under 26 can remain on a parent’s plan. The law also includes a slimmed-down health plan for people under 30 that is expected to cost less.

"Young people are going to get a huge benefit from the law," said Young Invincibles Deputy Director Jen Mishory.

Other groups have warned that the new package of benefits that insurers must cover may end up being so extensive that policies could become unaffordable.

The American Academy of Ophthalmology, for example, is urging some limits on vision coverage for children. The group supports the law’s requirement that insurance plans cover children’s eye care, but it worries about overuse of comprehensive eye exams on children who may not need them.

"We believe it is critical that these benefits remain affordable, available and do not drive up the cost ... which could result in fewer small businesses and individuals purchasing coverage," several groups representing eye doctors wrote in December in a letter to the Obama administration.

As next year approaches, it will be crucial to prepare consumers for some rate shocks, said Rhode Island Insurance Commissioner Christopher Koller, one of the nation’s leading regulators and a supporter of the law.

But Koller said he believes the market will settle down. "It is important to remember that this is a transition," he said. "We are getting to a more stable place."

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