Millions face sticker shock of health exchanges
'Open enrollment' begins in October for insurer marketplaces
Many individuals, especially younger and healthier adults, may be tempted to take a "free ride" — forgo buying insurance and pay a federal penalty, rather than purchase a policy whose higher cost is designed to offset the medical bills of older patients. If they are injured or become ill, a free-rider can purchase a new insurance policy.
"Young adults may simply decide not to buy coverage at all, particularly if they don't need it," Zirkelbach said. "And if they choose not to buy coverage, that's going to drive up costs for everyone else."
In most cases, penalties for violating the "individual mandate" are likely to be far below the cost of purchasing insurance. In 2014, people without health insurance will face an IRS penalty of either $95 or 1 percent of household income over the filing threshold, whichever is greater. The penalty increases in 2015 to $325 per uninsured person or 2 percent of income. In 2016 and beyond, the penalty will be $695 per uninsured person or 2.5 percent of income.
Millions of consumers are likely to face higher costs for new health insurance policies in 2014, regardless of whether those policies are bought on the exchanges or the traditional marketplace, according to insurance industry insiders and analysts.
Individual premiums are expected to rise significantly for young adults.
A recent article in the trade journal Contingencies by actuaries at Oliver Wyman, the New York management consulting group, found that premiums are likely to rise for working single adults up to age 44 — even after accounting for the aid of tax credits.
"Premiums for younger, healthier individuals could increase by more than 40 percent," the authors wrote.
Insurance carriers "are talking about significant rate increases for 2014," Caravus' Flotken said. "It's not a situation where they're going to gouge people, but they're expecting claims to go up significantly next year. It will vary greatly, depending on the size of the group and demographic composition."
Still, the CBO has estimated that premiums on the individual health insurance market in 2016 will cost 14 percent to 20 percent less than they would have cost had the Affordable Care Act not been enacted.
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