On a single day in January 2014, Utah's individual health insurance market now about 143,000 people strong could more than double in size as scores of uninsured heed federal health reform's mandate to purchase coverage.
One estimate, by an actuary consulted by the state's Legislative Health Reform Task Force, pegs growth at 50 to 150 percent.
It's an educated guess, based on research from other states and a poll of local insurers, said actuary Troy Pritchett with Milliman in Salt Lake City. But if predicting enrollment is hard, estimating how much these newcomers will cost and how much to charge them is even harder.
"[It's] very likely the most challenging actuarial problem ever faced by companies doing business in Utah," Pritchett told task force members last week.
What's clear, he said, is there will be winners and losers. And without taking steps to balance the score, the losers the young and healthy could see prices increase by as much as 135 percent.
"There's a lot of uncertainty, and uncertainty usually leads to higher prices," Pritchett said.
The "individual market" is where you buy insurance if your job doesn't come with health benefits. It's the path to coverage for just over 5 percent of insured Utahns, primarily the self-employed and part-time and low-wage workers.
And it's a market with fewer price protections than small and large employer groups enjoy. New regulations in the Affordable Care Act seek to remedy that. But the law leaves states leeway in implementing and enforcing the rules. How Utah chooses to act could determine how far prices swing, and whether insurers thrive or fail.
That's where the task force comes in. "The sooner we get to decide how to handle this, the better prepared insurers will be," Pritchett said.
New rules, new costs • Among the uncertainties is the precise mix of new enrollees.
Some will be a boon to insurers: the young and healthy. Others, the sick and uninsurable, will increase costs with their pent-up demand for medical care.
Pritchett sees newcomers breaking down like this: 35,000 to 130,000 will drop their current policy in favor of government-subsidized plans on Utah's health exchange; 30,000 to 80,000 will have been previously uninsured; and 6,000 to 9,000 will have pre-existing conditions that have made them uninsurable.
It's this last group that worries insurers most. Utah's federal high-risk pool, the insurer of last resort for many of these high-cost patients, pays out $8 in claims for every $1 in premiums collected.
Right now the government plugs the gap. But when this group enters the individual market, their costs will be borne by fellow policyholders.
Their presence, alone, could cause rates in the individual market to rise 35 to 45 percent, said Pritchett.
New industry regulations will cause yet another rate spike for the young and healthy. Come 2014, insurers will have to take everyone, even if you're sick.
They won't be able to exclude coverage of pre-existing conditions or charge you more for them. They can no longer charge women more than men and there are limits on how much more they can charge you based on your age.
For individually insured young adults, these rules, coupled with medical inflation, could add an extra 68 to 90 percent to premiums.
Spreading the risk • Of course, that's the idea of insurance: the healthy subsidize the sick, spreading risk and keeping prices manageable for everyone.
But it will only work if "young invincibles," who have shirked buying insurance until now, pony up, said task force Chairman Rep. Jim Dunnigan, an insurance executive and Republican from Taylorsville.
He fears some will pay the health law's $98 annual tax penalty instead of shelling out thousands for coverage.
Most young adults will qualify for federal subsidies, making coverage more affordable and attractive. "But for the poor soul who doesn't, there's going to be some sticker shock," Dunnigan said.
Lawmakers are exploring fixes permitted under the health law: the "three R's of insurance," risk corridors, risk adjustment and reinsurance. These tools protect insurers from footing disproportionate shares of high-cost patients.
• A risk adjustment program will require plans that enroll the lowest risk customers to make payments to plans that enroll the highest risk patients.
• In each state, insurers and health plans will make contributions toward reinsurance, or financial support for the individual market plans that end up covering patients with high medical costs.
• Under a risk corridor program, certain health plans that have lower-than-expected costs will make payments to the federal government, and certain plans with higher-than-expected costs will receive payments.
What that means, said Dunnigan, is that everyone will feel the ripple effects of the explosion in the individual market.
He believes the "three R's" will put some downward pressure on rates but won't be enough to keep prices in check.
Still, in Massachusetts, which pioneered the insurance reforms in the Affordable Care Act, enrollees in the state's exchange, or "Connector," have seen rates drop for the last two years.
Dunnigan thinks that's as much a reflection of the economy, and constrained health spending, as anything else. True reform won't happen until the country stops focusing on insurance prices and starts addressing the underlying medical costs, he said. "It's easy to go after insurers. They're an easy target."