Essentials of Health Policy and Law 2nd Edition by Joel Teitelbaum,Sara Wilensky

Exercise 6

While it has been more common for insurers to use experience rating than community rating, the ACA requires health plans in the individual and small group markets to use adjusted community rating rules. These rules only allow insurance companies to account for geography, age, tobacco use, and family size when setting premiums. The oldest beneficiaries may be charged three times more than the youngest and tobacco users may be charged 50% more than non-tobacco users. Insurers are prohibited from varying premiums based on health status or indicators of health status, such as claims history. What do you think of this rule? What are the pros and cons? Who is hurt and who is helped by this rule? Are there other factors that insurers should be able to take into account when setting premiums?