Problems with the government's main health care overhaul website carry a bigger risk than frequent crashes: Higher prices could follow for many Americans if technical troubles scare off young people.
The government has touted recent improvements to HeathCare.gov, which millions of Americans are expected to use to sign up for coverage. But enrollment still lags far behind projections, and that has triggered worries that legions of potential customers in their 20s and 30s might not sign up. If that happens — and older, sicker people continue to register in larger numbers — insurers might have to raise future prices to address the imbalance.
Although the chance of an age imbalance has loomed since the health care overhaul became law in 2009, it has become more worrisome since the website made its glitch-plagued debut in October.
Aetna Chairman and CEO Mark Bertolini said then that it was "incredibly important" to get the site running properly because "younger, healthier people aren't going to give them more than one shot."
Americans have until Monday to sign up for coverage that starts Jan. 1, and many are expected to wait until the last minute. They have until March 31 to find coverage and avoid a penalty for being uninsured next year.
Insurers need younger, healthier people to essentially subsidize the coverage they give older customers due to limits placed on the insurers by the overhaul. Americans in their 60s generally use about $5 in health care for every $1 used by those in their 20s, but the law limits insurers to collecting $3 in premiums from that 60-year-old for every $1 they collect from a 20-something.
On average, that means an older customer's premiums won't fully cover their medical expenses, while the opposite happens for younger customers.
Insurers factored that in when they began planning for the overhaul. They set rates based in part on the number of customers they expected to enroll who were above and below age 45. Even a small shift in the balance between those two groups can hurt an insurer if it comes after the company has set prices.
For every 10 percent decline in the younger population, an insurer's cost for care could rise by 1 percent, said Dave Axene, a fellow of the Society of Actuaries who helped insurers set prices for the overhaul's insurance exchanges in several states. If the older population also winds up bigger than expected, then costs could rise even more, depending on how other variables play out.
"Just a little shift in this ... all of a sudden you're caught with a serious problem," Axene said, noting the hikes will eat away at profitability, and many insurers were only expecting profit margins of 2 to 4 percent from business they get on the exchanges.
Insurers who wind up with a smaller profit or older-than-expected population in 2014 may be compelled to raise rates when they set prices for 2015. "These companies are not participating in these markets out of benevolence," said Jennifer Lynch, an analyst who follows health insurers for BMO Capital Markets.
Whether premiums change due to an age imbalance remains to be seen, in part because people are still signing up for coverage.
Insurers and the state-based insurance exchanges that are central to covering uninsured people under the law have stepped up their marketing to young adults as enrollment deadlines draw near. California's state exchange, for instance, is encouraging people to pledge to help get a young adult covered.
Young, healthy customers have some strong incentives to enroll, starting with tax penalties for those who remain uninsured. They also could qualify for income-based tax credits or subsidies that help them pay for coverage. "The health care law is making health insurance more affordable for young adults," said Joanne Peters, a spokeswoman for the U.S. Department of Health and Human Services.
If younger adults stay away and enrollment remains biased toward the older adults, insures may only hike future premiums by a couple percentage points, said Gary Claxton, a vice president with the Kaiser Family Foundation, a nonprofit that studies health care issues. He noted that companies can still vary their prices based on age, just not as much as they used to.
But insurers note that such an increase would be added to other cost hikes due to things like the rising cost of care.
The hit an insurer takes and the impact on future prices also may depend on how it approached the exchanges. Companies that saw them as a "land grab" for new customers and entered with low prices to attract as many people as possible may suffer a bigger blow than those that acted more conservatively, Lynch said.
The overhaul builds in safeguards to protect insurers during their first few years on the exchanges, when the new system is taking shape. A reinsurance fund will help insurers pay high claims, and another provision will help make up some of the difference in markets where an insurer's expenses exceed the premiums it collects.
Still, Axene and others say these programs will ease but not erase the impact of an insured population that skews older than an insurer expected.
"Those are important programs," said Robert Zirkelbach, a spokesman for the industry trade group America's Health Insurance Plans. "But that doesn't change the fact that if the young, healthy people chose not to participate, there still will be an impact on premiums."