Question

A 2-column table with 4 rows. Column 1 is labeled Selma with entries Female, 30 years old, Smoker, Has no preexisting health conditions. Column 2 is labeled Thelma with entries Female, 30 years old, Nonsmoker, Has a preexisting health condition.
Examine the table comparing two individuals.

Who is more likely to have higher health insurance premiums?

Which risk factor will make a difference in premium price for Selma and Thelma?

Which risk factor will not make difference in premium price?

Answer 1

Short answers
- Who likely has higher premiums? Selma (the smoker).
- Which risk factor will make a difference? Smoking status.
- Which risk factor will not make a difference? Age and sex (they are identical for both), so those do not explain any premium difference.

Brief explanation
- Smoking is a major underwriting factor that typically raises premiums because it substantially increases expected health costs. Selma’s smoker status therefore tends to push her premium above Thelma’s.
- Thelma’s preexisting condition could raise her premium in some markets or with some insurers, but in many jurisdictions (for example, ACA-compliant individual plans in the U.S.) insurers are prohibited from charging higher rates because of preexisting conditions. So whether a preexisting condition changes the price depends on the regulatory/insurance context.