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New law does have a price, but it’s pretty small

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Illinois

* The Tribune takes a clear-eyed look at the governor’s successful amendatory veto attempt to allow people to stay on their parents’ health insurance policy until the age of 26…

“Clearly, a bigger risk pool is always better,” said Todd Swim, a worldwide partner with the Chicago office of Mercer, an employee benefits consulting firm. “The cost of the average person in this age category is very low.” […]

“If additional people are added to a policy, that may increase the amount of claims incurred and will likely cause premiums to increase,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, which represents some of the nation’s largest health insurers, such as Aetna Inc., Humana Inc. and UnitedHealth Group. […]

But the state’s largest health insurer, Blue Cross and Blue Shield of Illinois, said it would add just 1 percent to the benefit costs of the average group plan. By comparison, employer health insurance costs have been rising 8 percent to 10 percent annually in recent years.

Two benefits consulting firms, Mercer and Hewitt Associates of Lincolnshire, said they could not say for sure how much health-care costs could rise.

But the approaches used by different states could tack on additional administrative costs to employers and insurers, particularly those who have employees in multiple states.

So, it’s likely to add to the cost of health insurance, but not much.

Thoughts?

posted by Rich Miller
Thursday, Aug 21, 08 @ 11:16 am

Comments

Its only a “1%” increase, is that suppossed to make me feel better about it?

Next week lets run the age up to 35, its only going to add a “8%” increase to the average cost.

Comment by Speaking At Will Thursday, Aug 21, 08 @ 11:36 am
many insurance companies already let you keep kids on the policy if they are in college, this just adds a few years to the coverage. Plus these are the healthy years for most people. Seems like a good plan and the detratctors are raising a tempest in a tea cup.

Comment by Ghost Thursday, Aug 21, 08 @ 11:43 am
1% is tiny compared to the increases we’ve been seeing. And if it gets significant people out of the uninsured pool, it might just start to lower health care costs overall (though because this group tends to be healthy anyway and it will only be middle class and above who will likely take advantage of this anyway, not much I’ll admit).

Comment by cermak_rd Thursday, Aug 21, 08 @ 11:43 am
Any time you can provide health care to someone who would normally not be able to get it, it would appear to me to be a good thing. Certainly those providing it would prefer to do so at higher profits but there is good reason everyone should have available and affordable health care. Most of the folks I know use health care for prevention and early treatment. That alone should provide us all benefits in many other areas.

Comment by Justice Thursday, Aug 21, 08 @ 11:47 am
Could this be a sign that the governor actually had facts supporting this move, and that it wasnt a simple press hit? Do his critics ever acknowledge when he does something good, as this action is?

I have defended the governor for some time and, to be honest, its nice when the press actually reports on the statistics that support the governor’s actions. Its so easy to pile on an unpopular governor that, if you’re not careful, you smother a lot of good ideas. Its time for the GA to act in a thoughtful way instead of a kneejerk, anti Rod way. We deserve it, as do our children.

Comment by anon Thursday, Aug 21, 08 @ 11:51 am
Hate to say it, but this time I agree with Blago. There are many part-time students who do not wualify for family coverage and many college graudates who do not have the luxury of health insurance in that first job. And if they try to start their own business, it’s usually the last thing they can afford. If I have to pay a few more bucks so my kid can be covered until she or he is on his feet then I’ll be happy to do it.

Comment by Joe Schmoe Thursday, Aug 21, 08 @ 11:51 am
I thought Madigan let this pass because he thought the AV would be challenged in court. It doesn’t sound like the insurance world is crying too much over this. If they don’t foot the legal bill for a law suit will anyone else step up to challenge the AV?

Comment by Been There Thursday, Aug 21, 08 @ 11:52 am
Relatively low-risk group, unless somebody gets pregnant. That costs.

Comment by wordslinger Thursday, Aug 21, 08 @ 11:56 am
Pregnancy is actually not that expensive unless it’s a high risk birth. People in that age group tend to have lower risks in child birth than older mothers. And it’s limitted–most people only have 2 children in their lifetime, usually spaced by a couple years at least, so it’s not like it’s a recurring cost. Also, because these are likely to be the adult children of middle and upper middle class families, they tend to defer childbearing unto their mid-twenties at least, so that’s getting to the edge of the law.

Comment by cermak_rd Thursday, Aug 21, 08 @ 12:12 pm
I thought all colleges/universities included basic health ins in the cost of tuition? They did at mine.

Comment by Anonymous Thursday, Aug 21, 08 @ 12:15 pm
One percent Minus the cost-shifting to those who currently have insurance are paying now for the health care costs of the tens of thousands of uninsured young adults whose costs are being added to doctor and hospital bills to pay for these uncompensated costs, that then result in the insurance industry inflating their premiums to everyone.
Great first step. A win-win for the uninsured, the provider community and most importantly Illinois families.

Comment by Heath Care for ALL Thursday, Aug 21, 08 @ 12:25 pm
Cermak, maybe our definition of expensive is different. I’ve been blessed with three healthy children, no problems whatsoever for mother or babies.

With the prenatal through strapping in the car seat at release, I’d say they cost my Blue Cross 20 grand a piece. And that was years ago.

My daughter broke her arm a few years back and it was $13,000 for a pin and cast.

There’s a reason employers pay a premium for contract workers.

Comment by wordslinger Thursday, Aug 21, 08 @ 12:41 pm
Seems like a good idea for a bill. Why didn’t the Administration introduce it next spring, rather than muddy the waters by the AV process?

Note to gov: it is possible to work with the General Assembly, and not by trying to trample it and its powers / constitutional authority at every opportunity.

Comment by Capitol View Thursday, Aug 21, 08 @ 12:41 pm
Capitol View and others -

It is a good idea. It has been a good idea for a year and a half or more.

The Governor first introduced it as part of Illinois Covered (but had it be up to Age 30 instead of 26). Then worked with Kotowski this Spring to try to get it through on its own.

The problem is that while the legislative process is very good for getting input, it also allows good bills to be killed by aggressive interested groups (insurance/business in this case) without much public awareness and without consequences.

The Governor basically said: Give this idea an up-or-down vote.

That’s the bully pulpit he has as Governor.

Comment by GoBearsss Thursday, Aug 21, 08 @ 1:37 pm
Noway it only adds 1%. You will increase the claims by taking on unhealthy uninsurables. Healthy ones will replace it with their own individual plan that costs half or worse go uninsured. So it will cost more than 1%. Next, check the financials on health insurance company profits. They range from 1% to 6%. Not alot of room for error. This is however a pretty good trade off for all involved. This is the first time I’ve agreed with anything the Governor has done in six years. I’m not sure how a 8K to 12K pregnancy is cheap when the insurance premiums run $125 to $300 a month. Try putting a calculator to work on that one. The insurance company always loses, but who cares about the insurance companies and their losses. They have plenty of money laying around. They won’t leave the market. Will they?

Comment by Southern Right Thursday, Aug 21, 08 @ 1:45 pm
Generally it’s good idea in principle. However, the governor abused his AV authority to enact it. the objective is laudable, but the means is suspect.

It should be challenged in court, but enacted legislatively. Any expansion of health care coverage for unisnusred populations is generally a positive development.

Comment by Captain America Thursday, Aug 21, 08 @ 1:48 pm
I still say this AV is a constitutional issue and the insurance issue is a red herring. If teh cost is so minimal, why wasn’t specific legislation introduced to accomplish this expansion and be debated on its merits? It’s the wrong question to ask about this current bill as enacted.

Comment by Captain Flume Thursday, Aug 21, 08 @ 1:49 pm
Southern Right, if Blue Cross says it’ll cost 1 percent, I gotta figure they’re probably right, or even a bit high. Insurance companies tend to scream about this stuff and high-ball all the time.

Comment by Rich Miller Thursday, Aug 21, 08 @ 2:06 pm
Actually this proposal was first proposed by the Health Care Justice Act’s Adequate Health Care Task Force. This Task Force was appointed by the four tops and the Governor. All the elected officials (GOP and Dems), along with appointees from the GOP leadership and the Dems not only supported this, but were able to reach agreement on a comprehensive reform.

Comment by Heath Care for ALL Thursday, Aug 21, 08 @ 2:38 pm
I think parents would be thrilled to have one more excuse to keep their 25 or 30 year old living at home…

Actually, for that cadre of the un-insured if mom and dad just ponied up for a no-frills individual catastrophic plan it would probably be cheaper than adding a young adult to their existing plan.

Comment by Greg Thursday, Aug 21, 08 @ 3:56 pm
The Governor should be commended for such an excellent move. If any of you readers are sitting in Oxford when he checks in after his sentencing, let him know that it was a good move when you see him.

Comment by VanillaMan Thursday, Aug 21, 08 @ 4:14 pm
Greg, you assume that all young people are insurable. Not so. My young adult son was uninsurable due to a history of polycystic kidney disease in his father’s family. At age sixteen, he began passing kidney stones (not a good sign). At age 20, he was diagnosed with cancer. Would you sell him an individual insurance policy?

Comment by Beancounter Thursday, Aug 21, 08 @ 4:16 pm
Rich, Blue Cross Blue Shield is priced about 18% to 30% high in the 18 year old to 30 year old market on their group plans in Illinois. Most healthy 18 to 30 year olds get off Blue as soon as possible. Therefore they already have adverse risk, which is my point. The Blue plans are already expensive, so 1% is accurate for them, but not for UHC, Aetna, Cigna, Humana, Trustmark, Coventry or Healthlink. In the overall scope of what has been proposed in the last 24 months by the Governor, all insurance carriers are thrilled to lose a small battle in their lowest loss sector. They are not the enemy.

Comment by Southern Right Thursday, Aug 21, 08 @ 4:28 pm
Why are we even discussing employee-based health care plans? Most large employers are exempt from state regulation under the federal ERISA Act.

Comment by Yellow Dog Democrat Thursday, Aug 21, 08 @ 4:50 pm
Beancounter, I don’t assume anything. The vast, vast majority of the invincibles — the under 35 set are insurable but forgo it because the financial costs outweigh the benefits of having something they are unlikely to use.

With regard to your son — and I’m sorry to hear about it, I know it can be tough… We can find ways of addressing that very real problem with the uninsurable instead of messing with this stuff.

And oh, by the way. A young adult on his parent’s policy who gets sick and then turns 26 or a 30 year old veteran who gets sick on his parents policy is going to be uninsurable after his 26th or 30th birthday. And you are more likely to have problems at age 30 then you are at 21. So, we could be creating a further problem down the road.

But hey, as long as the politicians get the credit for doing something and are easily re-elected…I guess it’s all ok.

Comment by Greg Thursday, Aug 21, 08 @ 5:01 pm
Because, Yellow Dog, there are some things the state can control…

Comment by GoBearsss Thursday, Aug 21, 08 @ 5:11 pm
This is a good thing (regardless of everything else). I have a son who recently graduated college and can’t find a job (ergo no insurance). He’s working as a barista with no benefits. It’s cruel to throw a kid off your plan just because they are 23.

Comment by Been there, done that, got the bills... Thursday, Aug 21, 08 @ 5:19 pm
This is a godsend for my family. I have a 24 year old son who is an Air Guardsman and an Iraqi vet. He is attending ISU full time and working two part-time jobs and can in NO way afford private health insurance. Since being booted from my policy, he has had some health related problems and has had to doctor himself as best he could or borrow the money from me to help cover his treatment costs. This law will remove a huge burden from both our shoulders. I do NOT like the gov and never will, but I sure do like the law.

Comment by Sweet Polly Purebred Thursday, Aug 21, 08 @ 5:51 pm
These sorts of jerrybuilt fixes are what we get when we fail to broadly address the issue of access to health insurance. They are what can be accomplished, and don’t pretend to be what should be accomplished.

The Gov has made it clear he is committed to expansion of health coverage, whether we agree with him or not. He hasn’t been able to get his broader plan fully implemented, and this was something he could do. Simple as that.

Comment by steve schnorf Thursday, Aug 21, 08 @ 6:24 pm
I find this program that actually helps keep people off the medicaid roles a good thing. If we are willing to pay for the coverage, what’s the problem? I must say that I do take exception to the gov’s ALL KIDS/ALL FAMILIES insurance scams. The amount of income a family is allowed and still qualify for subsidized health insurance is obscenely high. Why should a family of five with a MONTHTLY GROSS income of $16,534 and over be able receive subsidized state health insurance through ALL KIDS?

Comment by Sweet Polly Purebred Thursday, Aug 21, 08 @ 7:53 pm
Here’s the link - http://www.allkids.com/income.html

Comment by Sweet Polly Purebred Thursday, Aug 21, 08 @ 7:55 pm
There’s a chance that my husband and I can keep our girl on health insurance until she’s 26? I’m thrilled. We are self-employed and self-insured with BCBS. Our daughter has Type 1 diabetes, which means she’s uninsurable unless she’s can join an employer’s group policy when she’s an adult. Btw, had we not had health insurance before her diagnosis, we’d be one of the families needing and qualifying for the AllKids “insurance scam”—and not because we earn $16K a month. Not even close.

Comment by Suzanne Thursday, Aug 21, 08 @ 8:53 pm
I lost a brother to type 1 diabetes and understand completely the inability to obtain health insurance. I also understand that there are definitely hard working taxpayers who cannot afford health insurance without some subsidization, but someone making OVER $16,000 gross a MONTH? If they cannot afford it, maybe they need to reassess their fiscal priorities and FIND the money instead of relying on the tax dollars of hard working middle class citizens.

Comment by Sweet Polly Purebred Thursday, Aug 21, 08 @ 9:02 pm
Sweet Polly: What a terrible loss. Truly. It’s this Mommy’s worst fear but it’s your reality. I am so sorry.

Just out of curiosity, what are the premiums for the 16K/month family? Could it be they’re paying full boat in the AllKids program? Keeping a census up can keep premiums down for the entire pool so including the high income earner, depending on the premium, may not be getting the free ride we imagine. Just a thought.

Comment by Suzanne Thursday, Aug 21, 08 @ 9:15 pm
The premiums are $300 a child per month with no caps on maxium premium paid - on lower incomes there is either no premium or the maxium premium that a family has to pay has a cap. Also there is no cap on maximum out of pocket - on lower incomes there is either no out of pocket or the maximum out of pocket is capped. I do understand your point on cost spreading and that the premiums collected from the higher income groups help pay for the lower income families free or reduced service and am embarrassed by my oversight of the obvious. And thank you for your words of kindness!

Comment by Sweet Polly Purebred Thursday, Aug 21, 08 @ 10:05 pm