Reader Question – Are there premium caps in the bills?

A reader writes:

Since you desire questions and answer them so well, I have one for you now.  Dr. Carroll, in any of the healthcare reform bills, is there a provision that caps the amount of premium that an insurance company can charge an insured?  After all, if insurance companies are forced to cover applicants with existing health issues, those folks will pay a hefty price.  Probably more than they can afford.  Add in the additonal taxes/fees levied on insurance companies that the Baucus bill is proposing and you have the potential for health insurance premiums going through the roof. Hopefully, there will be a ceiling on how much an insurance company can charge, based on some fixed formula that isn’t inflated by the expectation of government tax credits or subsidies to insurance policyholders.   Thanks again Dr. Carroll for being a calm, sensible and intelligent contributor to the healthcare reform debate.  If you could pin your radio and/or television schedule to the blog permanently, that would be awesome.

As far as I can tell from the bills so far (I’m still working my way through the Baucus bill), there are no maximums set on how much premiums can be. There are provisions on the minimum amount of services that must be covered. There are also maximums that some people could be expected to pay at some levels of income, as a percentage of their income. This is one of the main arguments for the public plan. It’s a way – theoretically – for the government to make sure that at least one plan is still “affordable”. Otherwise, they may all cost too much.

There are regulations, however, as to the ratio between what a plan can charge based on risk. In the House bill, the most a company can charge based on age, tobacco use, or family composition is twice the cheapest amount. In Senator Baucus’ bill, that ratio is 7.5 to one. This means that premiums can likely go much higher in the Senate Finance Committee version, as described at this time. It’s still got a ways to go.

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