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Debate Waged Over Benefits of 'Catastrophic' Plans

03/8/2010

High deductibles associated with a "catastrophic" plan may make health insurance unreasonable for some young Americans.

Recent data from the National Health Survey showed that this group is the most likely to go without health insurance: About 30 percent of Americans age 20 to 29 were uninsured in 2008.

According to a report by USA Today, these catastrophic plans, available to people under 30 through the Obama administration's healthcare reform, feature deductibles near $6,000. This means that consumers would have to pay out-of-pocket for medical costs below that level.

"This would help the insurance companies, but it would not do much to help the individuals insured," Senator Bernie Sanders told USA Today.

Many are debating the benefit of these policies, which cost less than traditional health insurance. Young people may prefer to pay a fine to be uninsured rather than face such high deductibles, according to the report.

Older customers currently face higher health insurance premiums. This would likely change if healthcare reform eliminated the "age-rating" currently used by insurers. A small price increase for catastrophic policies would still make them cheaper than traditional plans, while improving their coverage.

Healthcare reform would also make it easier for low-income or unemployed individuals to apply for coverage under Medicaid.

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