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  #1  
Old 02-23-2020, 08:40 PM
Latitude30 Latitude30 is offline
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Default Why donít they make health insurance products that are issue-aged level premiums

On a Federal exchange,

With much richer benefits but only are sold to individual policyholders under the age of 25? This would bring in a cash inflow that would cover the cost of care in “longer into the future situations” so these individuals would be paying monthly premiums in the future that are well below the 1-year premiums they would be owing , on any policy under the same carrier offering this level premium Plan, and can use their policy reserves to buy up if they have complex medical needs?

It’s a prepay for the cost of childbearing before you get there, but discounted by time value of money
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Old 02-23-2020, 09:15 PM
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Can't talk, actuarializing, go hug wife and kids. kthxbai
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Old 02-24-2020, 09:36 AM
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Quote:
Originally Posted by Latitude30 View Post
On a Federal exchange,

With much richer benefits but only are sold to individual policyholders under the age of 25? This would bring in a cash inflow that would cover the cost of care in ďlonger into the future situationsĒ so these individuals would be paying monthly premiums in the future that are well below the 1-year premiums they would be owing , on any policy under the same carrier offering this level premium Plan, and can use their policy reserves to buy up if they have complex medical needs?

Itís a prepay for the cost of childbearing before you get there, but discounted by time value of money
Medical expenses have historically increased at a rate well above the average inflation rate and are somewhat unpredictable = very risky.
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Old 02-24-2020, 09:46 AM
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also greater persistency risk

also need to hold greater reserves
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Old 02-24-2020, 10:16 AM
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also early premiums would be >>>>>>>>> non-level premium rates. Would be tough sell at 1500/month vs a 300/month plan.

also massive risk of mis-price: see LTC pricing 1990-2008

also doesnt fit well into the current no UW rules for health insurance since you would have to UW such a product.
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Old 02-24-2020, 10:59 AM
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Quote:
Originally Posted by Latitude30 View Post
It’s a prepay for the cost of childbearing before you get there, but discounted by time value of money
Buy policy at 20, have kid at 21 and collect benefit, then cancel policy. Win! (have you googled average cost of a birth? My C-section was $30K).

Repeat for each child until 25.

I actually saw this happen on a fixed indemnity hospital product (pre-ACA). One iteration anyway. I remember questioning the inforce I was seeing early on (lots of issue age 20-something females in a certain state - I thought it was a data error), and was told "oh yeah, that data's correct, there are a couple agents who are just really selling a lot." OK then. Several months later....

Last edited by MG; 02-24-2020 at 11:36 AM..
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Old 02-24-2020, 11:34 AM
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The 3:1 (or is it 5:1 now?) ratio in Obamacare, IMO, could be looked at as kind of a ham-handed "generational" way to accomplish this. Charge too much when you're younger and we'll subsidize you when you're older. Not level, but more "levelized".
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Old 02-24-2020, 12:00 PM
Bassooner Bassooner is online now
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If they're 25 and under, then they can be on their parents' insurance and probably wouldn't want to start paying for additional coverage .

Also, there's a lot of churn in the individual market. What happens when someone on one of these plans gets a new job that comes with health coverage? Or they become unemployed and get on Medicaid?
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Old 02-24-2020, 12:01 PM
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Quote:
Originally Posted by Latitude30 View Post
On a Federal exchange,

With much richer benefits but only are sold to individual policyholders under the age of 25? This would bring in a cash inflow that would cover the cost of care in ďlonger into the future situationsĒ so these individuals would be paying monthly premiums in the future that are well below the 1-year premiums they would be owing , on any policy under the same carrier offering this level premium Plan, and can use their policy reserves to buy up if they have complex medical needs?

Itís a prepay for the cost of childbearing before you get there, but discounted by time value of money
We talk about this (and other related items) in our The Actuary article, "The Old and the Beautiful":

https://theactuarymagazine.org/the-o...the-beautiful/

You may like it.
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  #10  
Old 02-24-2020, 12:49 PM
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Quote:
Originally Posted by Latitude30 View Post
Itís a prepay for the cost of childbearing before you get there, but discounted by time value of money
With the birthrate declining it's tough to make that assumption
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