Issue Background

Market Reforms

Issue Resources

Insurance Market Reforms | NAHU's specific policy recommendations to ensure that all people, regardless of their health status and pre-existing medical conditions, have the ability to purchase affordable private individual coverage.

Impact of the ACA's 3:1 Age Band Ratio | A January/February 2013 study on the impact of age band compression published in Contingencies, a magazine by the American Academy of Actuaries.

What You Need To Know About Age Bands | America’s Health Insurance Provider (AHIP) has developed a paper on what American’s need to know about age rating and the impact it may have on their health insurance costs.

As an association of benefit specialists who help individuals and businesses purchase private health insurance coverage on a daily basis; NAHU knows that the vast majority of Americans are happy with their current health insurance coverage, particularly those who receive it through the employer-based system. But even though this system works well for many people, the current regulation of the private health insurance market is not without its gaps. NAHU knows that market-reform improvements can enhance Americans ability to access fair and affordable healthcare coverage.

One way states can ensure that health coverage remains affordable for everyone is to use age rating bands which enable premium costs to be spread over a range of age groups. Since older consumers typically incur higher health costs than younger consumers, a state could put an age band of 5:1 in place. The 5:1 ratio would ensure premium costs for an older consumer is no more than five times that of a younger consumer. Unfortunately, the health reform law did not consider that many states had a 5:1 age band ratio or higher and imposed a standard 3:1 age band ratio on all states across the country on January 1, 2014. The new 3:1 age band ratio under the ACA has resulted in higher premium costs for young consumers; also known as the "young invincible" population.

NAHU strongly supports legislation that would give states the flexibility to determine age rating standards using the demographics of their state or default to an age band of 5:1.