Group Health Insurance Demographic is "Graying"

The population in group health private insurance is becoming older and wealthier at a rate greater than the population overall, which could add pressure to an already strained health insurance system, according to a Yale School of Medicine study.

This trend makes it harder for health insurers to pool risks since fewer younger people with lower health costs are covered by these employment-based plans, said Patricia Keenan, lead author of the article in Health Affairs and assistant professor in the Department of Epidemiology and Public Health.

“Older, more affluent people are more likely to keep their employer-based coverage as premiums rise while others increasingly get public coverage or go without altogether,” Keenan said. “Population aging combined with declines from rising premiums could further destabilize the employment-based health coverage system.”

She said private coverage has been in a slow decline since the late 1980s and younger and lower-income groups have disproportionately lost coverage. Keenan said even if the population with employment-based coverage remains quite healthy, costs of coverage could increase as the average age of people with group coverage rises.

Although the main driver of rising premium costs is ongoing changes in medical technology, Keenan said, there is the possibility that population aging will interact with ongoing differential declines in group coverage to add to ongoing increases in premium costs.

“In contrast to substantial policy attention to the implications of population aging for Medicare and Social Security, the potential consequences of population aging for group health insurance have received little consideration,” she said. “Well before we see the effects of baby boomers’ retirement on Medicare and Social Security financing, population aging combined with rising premiums could place more pressure on an already strained employment-based health insurance system.”

Health Affairs 25: 1-10 (November/December 2006)

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