MacArthur Amendment to AHCA Means Higher Premiums for Age and Pre-existing Conditions

MacArthur Amendment to AHCA Means Higher Premiums for Age and Pre-existing Conditions


We already know that health insurance legislation known as the American Health Care Act (AHCA), is a bad deal for older Americans ages 50-64. For people who purchase coverage on their own in the individual (nongroup) market and are not yet eligible for Medicare, the bill would significantly increase premiums for all older adults and spike costs dramatically for lower- and moderate-income older adults.

Now a bad bill just got worse. The House is considering a new amendment introduced by Representative MacArthur that would make the legislation even more harmful for older consumers. The MacArthur amendment establishes state waivers that would allow insurance companies to charge older Americans and people with pre-existing health conditions higher premiums and weakens critical consumer protections.

Even Higher Premiums for Older Adults

AARP strongly opposes the AHCA for weakening the 3:1 limit on age rating in current law, which prohibits insurance companies from charging older adults more than three times the premium a younger person pays for the same coverage. The AHCA would allow insurance companies to charge older adults significantly higher rates — up to five times more than younger adults. The MacArthur amendment goes further by allowing states to set even higher limits – so that older adults can be charged six times, or more, what they charge younger adults.

Because of these changes, lower- and moderate- income older adults, who would receive significantly less tax credit assistance under the bill, would end up paying significantly higher premiums than under current law. Since the MacArthur amendment would allow insurers in waiver states to charge older adults even higher prices for health insurance, their premiums will increase higher than what we previously estimated.

Loss of Protections for People with Pre-existing Conditions

The amendment would also allow insurance companies to return to charging people with pre-existing conditions higher rates based on their health status – something that was previously common practice among insurers but prohibited by the ACA. If a person experiences a break in insurance coverage, insurers in waiver states could be free once again to charge people with pre-existing conditions significantly higher, and potentially cost-prohibitive, rates. This would hit the older adult population hard, since 40 percent of 50- to 64- year olds have a pre-existing condition.

Reduced Coverage and Fewer Choices for Older Adults and People with Pre-existing Conditions

The MacArthur amendment allows states to waive federal standards for minimum coverage (known as Essential Health Benefits) and instead set their own standards. Under current law, insurance companies have to sell plans that include basic comprehensive coverage, requiring benefits such as prescription drugs, rehabilitative services, and mental health care. Under this amendment, states could set standards that allow insurers to sell less comprehensive, potentially even “skimpy” coverage.

Once a state chooses to eliminate the requirement that policies include certain benefits, it is unlikely that those benefits would be offered at all in the individual market in that state. The result would be less choice and reduced access to needed services for people with pre-existing conditions and health needs.

Weaker Protections Against Lifetime and Annual Limits – Even for Those with Employer Sponsored Coverage

The MacArthur amendment’s language allowing states to weaken Essential Health Benefit requirements also weakens another related set of consumer protections – the ACA’s limits on annual out-of-pocket spending and ban against lifetime and annual insurance limits. For example, as a result of the ACA, 105 million Americans, including people with employer based coverage, benefited from the law’s ban on lifetime limits, providing consumers with critical protection from the risk of medical bankruptcy. Under the MacArthur amendment, waived essential health benefits would no longer be included in these protections. This would be particularly harmful for people with pre-existing conditions or people who develop serious health problems if the services they need once again become subject to such limits.

The MacArthur amendment, simply put, makes a bad bill even worse.

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Jane Sung is a senior strategic policy adviser with AARP’s Public Policy Institute (PPI), where she focuses on health insurance coverage among adults ages 50 and older, private health insurance market reforms, retiree coverage, Medicare supplement insurance and Medicare Advantage.

 

 

 

 



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Proposed Tax Credits Raise Affordability Concerns For Older Adults

Proposed Tax Credits Raise Affordability Concerns For Older Adults


Did you know that over 3 million older adults ages 50-64 rely on Affordable Care Act (ACA) tax credits to purchase health coverage? In fact, pre-ACA, almost half of them were uninsured.

These credits help older adults with low- to moderate-incomes offset some or all of the cost of their health insurance premiums. They are a critical form of financial assistance for those without access to health insurance through an employer or public program.

The American Health Care Act (AHCA), as introduced on March 6, 2017, repeals current-law tax credits and replaces them with a new “flat” tax credit adjusted by age. We find that compared to current law, the proposed tax credit amounts would be substantially less for low- to moderate- income older adults, hitting the oldest particularly hard. Such changes could lead to older adults becoming uninsured or underinsured.

Lower- and Moderate-Income Persons Get Less

As figure 1 shows, under the AHCA, tax credits for those making $15,000 a year would be significantly less than what they receive today: between $2,200 and $5,900 less. Our paper also shows that for those earning $25,000 and $45,000 a year, tax credits would be between $850 and $4,500 less.

 

Figure 1

 

Older Persons Face Larger Reductions

Protections in current law provide larger tax credits when premiums are higher to ensure insurance remains affordable. Even though tax credits under AHCA increase by age, the increase isn’t sufficient to offset the much higher premiums that older adults pay relative to younger adults in the individual market. As a consequence, older adults face greater reductions in tax credits under AHCA than younger adults. A 64-year-old earning $25,000, for example, would face a reduction 5 times greater than that of a 50-year-old.

Combined Effect of Tax Credit Changes and Increasing Age-Rating

Potentially exacerbating the financial hit even further, the “flat” tax credits proposed under AHCA come alongside other changes that could further reduce health insurance affordability for older adults, including weakening limits on age-rating for health insurance premiums. In combination, the tax credits and age-rating changes could increase premiums for 50- to 64-year-olds by as much as $8,400 a year (figure 2).

 

Figure 2

 

Thirty-five percent of all nonelderly adults eligible for tax credits are between the ages of 50 and 64. They simply cannot afford to pay more for their health insurance. The lower tax credits proposed in AHCA will force millions of older Americans to forgo insurance or buy less expensive insurance that covers less, leaving them without the care that they need.

 

Jane Sung is a senior strategic policy adviser with AARP’s Public Policy Institute (PPI), where she focuseson health insurance coverage among adults age 50 and older, private health insurance market reforms, retiree coverage, Medicare supplemental insurance and Medicare Advantage.

 

 

 

Lina Walker is vice president at the AARP Public Policy Institute, working on health care issues.

 

 

 

 

Olivia Dean is a policy analyst with the AARP Public Policy Institute. Her work focuses on public health, mental health, health disparities and healthy behavior.

 

 

 



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