One Premium Fits All?

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The upshot has been a furious explosion -- over age, not geography. Thirty- year-old males watched their premiums soar 170%, according to the Council for Affordable Health Insurance, while men aged 60 enjoyed a 45% cut. The rate hike for 30-year-old women was 82%, and women twice their age saw rates slashed by a quarter. Mutual of Omaha, the only insurer to continue extending coverage to New York individuals after the plan went into effect, watched with frustration as 43% of its customers dropped their health coverage and the average age of its clientele edged upwards from 41.5 years to 45.

Cecil Bykerk, Mutual of Omaha's chief actuary, regards the outcome as inherently unfair. "A younger person might be paying twice or more, as a percentage of income, as a mature person," he says. Salvatore Curiale, New York State's superintendent of insurance, counters that the new scheme is "an unqualified success."

New York's experience so chilled industry analysts that the Health Insurance Association of America agreed to shut down the Harry and Louise commercials when Rostenkowski agreed to permit insurers to factor in some variations in premiums according to age. The New York model has also persuaded analysts that community rating without universal coverage is a recipe for disaster. They can foresee a mass exodus by young people, which in turn will nudge up prices for older Americans -- and lead to more havoc.

Republicans maintain that costs can be held down without compelling all Americans to jump into the health pool. But premium leveling, the one component of health-care reform that enjoys almost universal support, cannot be addressed in a vacuum. Much like anatomy, all the pieces connect: the aging and the sick are connected to the young, who need employers to ease their new burden, who need the cooperation of other employers to spread the costs. Otherwise, the healthiest and the wealthiest will forgo insurance -- and America's health-care system could get even sicker.