Earlier this week, the U.S. Department of Health and Human Services released a report that stated about 70 percent of Obamacare’s customers are 35 years of age or older, indicating that U.S. health care overhaul is initially attracting a less healthy population that may drive up insurance premiums. About 24 percent were 18- to 34-year-olds, and about one-third were 55 or older.
Moody’s released a comment identifying two challenges related to those in the 18-34-year-old age group that may be problematic for health insurers. The first is related to the health status of those who have signed up. “We suspect that the enrollees may very well be the least healthy of the 18-34-year-old age group, or those who have a specific need for health insurance coverage in the coming year. If this is the case, this group would not provide the financial support insurers need to cover the higher medical costs of the older enrollees.”
The second challenge relates to the percentage within the 18-34-year-old group that cancel their policies after a few months. “Since insurers are relying on a full year of premiums from this age group to support claims from older individuals, the potential for a large number of these young invincibles’ cancelling their policies during the year is a risk for insurers,” the rating agency said. “The probability of cancellation may be higher for those who purchased a policy as a result of a marketing push rather than a perceived need. Although these individuals may have been convinced of the value of a comprehensive health insurance package, the monthly premium requirement, along with a lack of need to obtain medical care, may cause them to reevaluate.”
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