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Here's how the House's health care bill would hit older adults especially hard

Here's how the House's health care bill would hit older adults especially hard

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[Photo by Club Paf via Flickr.]

Earlier this month, the House of Representatives passed the American Health Care Act (AHCA) by four votes. The bill has now moved on to the Senate. While the House bill would give upwards of $600 billion in tax cuts to very wealthy Americans, and impose changes aimed at helping largely the young and healthy, it would have devastating consequences for older Americans — those ages 50 to 64, and those who have Medicare, Medicaid or both.

Among the groups most impacted by AHCA would be older adults not yet eligible for Medicare — individuals aged 50 to 64 — who face more struggles in the job market than younger people, and, by virtue of being older, tend to have more preexisting conditions. Thanks to the Affordable Care Act (ACA), the nation’s overall uninsured rate has fallen to its lowest level on record, and the uninsured rate for adults ages 50 to 64 has decreased from 14 percent in 2013 to 9.1 percent in 2016. The ACA currently requires insurance companies to charge older adults no more than three times the amount charged to younger individuals. The GOP plan, however, would allow states to charge older adults up to five times more than young people — or apply for a waiver that could allow even higher amounts. This provision, which the AARP calls an “age tax,” would substantially raise premiums for older adults.

This dramatic increase in premiums for older adults would be made worse by the AHCA’s erosion of the ACA’s premium tax credits and the elimination of cost-sharing assistance. Under the ACA, premium tax credits are available for individuals with incomes between 100 and 400 percent of the federal poverty level (up to $47,550 in annual income for 2017). In addition to an individual’s income, the size of the tax credit is based on the cost of a benchmark health insurance plan offered in each state (thus, the value of the tax credit better reflects the actual cost of the coverage). Under current law, additional financial assistance in the form of cost-sharing reductions is available for people with lower incomes (up to 250 percent of the federal poverty level, or $29,700 in 2017). These subsidies help reduce out-of-pocket expenses such as deductibles, coinsurance and copayments.

The AHCA would do away with cost-sharing subsidies altogether, and replace the current premium tax credit with a new “flat” tax credit that is adjusted by age (but unlike the ACA, would not be based on an individual’s income or the actual costs of insurance in a given state). The AHCA’s premium tax credits would start at $2,000 for those under age 30, and increase up to $4,000 for those ages 60 and older (credits begin to phase out at incomes above $75,000 for individuals). This limited assistance would not likely be enough to cover increased costs. According to AARP, for example, “premiums for 60- to 64-year-olds would increase by an average of $3,200, amounting to average unsubsidized premiums of almost $18,000 per year.”

As a result of these changes, the most recent Congressional Budget Office analysis of the AHCA predicts that rising costs would result in fewer people across the board having health insurance, particularly those in their early sixties.

The amended version of AHCA that passed the House would only make matters worse by rolling back some of the ACA’s key consumer protections. Under the AHCA, states could allow insurance companies to penalize individuals who go without continuous coverage by allowing companies to take into account pre-existing conditions when setting premiums. As Trudy Lieberman recently noted here, 40 percent of adults between ages 50 to 64, or about 25 million people, could be denied coverage if the preexisting conditions protections disappear.

Older adults who already have insurance coverage are not immune to the AHCA’s changes either. One of the effects of AHCA’s proposed tax cuts for higher income earners would be to accelerate the projected insolvency date of the Medicare Part A Trust Fund by at least two years, from 2028 to 2026. Further, the repeal of a tax on pharmaceutical manufacturers would increase Part B premium costs for Medicare beneficiaries.

More devastating, however, would be the projected $834 billion in cuts to Medicaid ushered in by the House bill. This would mean effectively ending the Medicaid expansion under the ACA and fundamentally restructuring the Medicaid program by imposing caps on funding. One in five people with Medicare rely on Medicaid to cover Medicare premiums and cost-sharing, and services that are not covered by Medicare, such as vital long-term home care and nursing home services, among other things. Drastic cuts to Medicaid would likely force states to make difficult choices about eligibility and coverage, putting older adults on Medicaid at tremendous risk of reduced access to both coverage and care.

If enacted, AHCA would have a profoundly negative impact on health insurance coverage in our country, especially for older adults. Policymakers must take account of these risks if they are to enact meaningful health reform.

[Photo by Club Paf via Flickr.]


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While acknowledging that a move away from a ratio of 1:3 for premium levels based on age to a ratio of 1:5 would see older insureds charged a lot more than under the ACA, it is important to consider the facts. I am a consulting actuary with more than 40 years of experience working with employers, insurers, providers of care, and regulatory bodies. The data are clear! On average, individuals who are older have more health conditions and seek more care than younger people, and they do it at a rate that generates an average cost per person of at least 4.5 times the cost for someone aged 20-24. In other words, the 1:3 ratio of the ACA provided significant subsidy (separate from any other subsidies) to older insureds -- and required sufficient enrollment of younger insureds to offset that subsidy. Moving to a higher ratio simply reduces the subsidy and reflects real costs. If premiums are insufficient to cover claim costs, then claims end up being unpaid. So sufficient funds must be provided. Further, for the population this change in ratio affects, the insurers are required by law to pay out 85% of the premium in claims -- that 15% differential serving to cover administrative costs, regulatory filings, and sufficient reserves that the insurers are deemed to have sufficient risk based capital.
Please understand this is not an argument for the proposed changes to the existing ACA, but merely to present information about the particular discussion regarding age based rates. The ACA is imperfect as it stands, but the changes proposed do not "solve" the problems. While my colleagues might find my personal position heresy, I believe our only solution is lifelong coverage -- birth to death -- best achieved by a single payor system.

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I have just turned 65, and I am terrified I will not be able to afford health coverage.

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it is clear to me that this new health care bill is not for the people at all it is for the rich and ones who can afford high premiums already. It hurts the low income, disabled and elderly . It is an embarrassment to the United states.

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