A late-breaking attempt to repeal and replace the Affordable Care Act (ACA) threatens to weaken critical federal consumer protections and raise costs for older Americans ages 50-64 who purchase health insurance coverage in the individual market. Tucked into the sweeping legislation known as the Graham-Cassidy bill are provisions allowing states to receive waivers from crucial consumer protections. Such waivers could allow insurance companies to increase costs for older consumers based on their health, preexisting conditions, and age–potentially putting health coverage out of financial reach for millions.
People with Preexisting Conditions Could Face Significantly Higher Premiums
Current law prohibits health insurance companies from denying people coverage or charging higher rates based on a person’s health. Under the Graham-Cassidy bill, however, states could obtain a waiver to allow insurers to vary premiums based on people’s health or preexisting condition. This means that consumers with a health condition such as diabetes, cancer, or heart disease could face significantly higher premiums.
This would hit older adults hard: 40 percent of 50- to 64-year olds have a preexisting condition. Prior to the ACA, most states allowed insurers to charge higher premiums based on preexisting conditions. That meant consumers with preexisting conditions were often unable to purchase affordable coverage. The Graham-Cassidy bill would force consumers to, once again, worry about whether their health status will keep them from being able to afford coverage or the care they need.
Less Coverage and Higher Costs for Older Adults and People with Preexisting Conditions
The Graham-Cassidy bill would also allow states to waive current law requirements that health insurance plans cover 10 categories of services (known as Essential Health Benefits). Similar to earlier proposals, states could eliminate some or all of the required benefits. Without these requirements, insurers could choose to exclude or limit important health benefits such as hospital care, prescription drugs, and mental health or substance abuse treatment. For people with health concerns and preexisting conditions, finding adequate, affordable coverage with the benefits they need would very likely become challenging and expensive.
These waivers may also allow states to weaken or eliminate the ACA’s prohibition against dollar limits on benefits people may get in a year or over their lifetime. Such annual and lifetime caps were unfortunately common practice prior to the ACA—forcing some consumers into medical bankruptcy when they got sick. Weakening these key protections is a step backwards for consumers.
Insurance Companies May be Allowed to Discriminate Against Older Americans
Under the ACA, insurers cannot charge older adults more than three times what they charge others for the same coverage (known as 3:1 age rating). Under Graham-Cassidy, however, states may be able to waive this critical protection for older adults. Older adults living in states that have waived that protection would face significantly higher rates simply on the basis of age– potentially as high as five, six or more times what they charge others for the same coverage, depending on the state.
In short, the Graham-Cassidy bill is harmful for older adults and people with preexisting conditions. It would undermine critical consumer protections, making health insurance coverage unaffordable and denying people with health conditions the care they need.
Prescription drug abuse is a serious and growing public health issue in the United States. While media attention and policy efforts often focus on younger populations, older adults are not immune to the problem. A new AARP Public Policy Institute report finds that while the prevalence of prescription drug misuse is higher among younger ages, it would be a mistake to overlook such behavior among older adults. Here’s why.
First, a number of factors make older adults more susceptible to prescription drug misuse. Older adults typically take more prescription medications than younger adults (figure 1)—often multiple drugs at the same time—increasing the likelihood of problems arising. Age-related physical, emotional, cognitive, and functional changes can also increase the potential for misuse, either unintentional or intentional.
Further, prescription drug abuse often goes unrecognized or misdiagnosed in older adults. There are several possible explanations, including coexisting health conditions that can make it hard to identify abuse. Meanwhile, providers often lack the training and diagnostic criteria needed to properly detect the problem.
The result? Many older adults who abuse prescription drugs never receive a proper diagnosis or treatment.
This is a complex issue that policymakers and health professionals should tackle accordingly. As our aging population grows, the number of older adults at risk for abusing prescription drugs will likely grow as well. We need age-appropriate diagnostic and treatment practices that focus on changing prescriber behavior (like limiting overprescribing) and improving access to effective treatments for prescription drug abuse. At the same time, it’s also important to ensure that policymakers don’t implement overly broad policies that could limit access to prescription drugs for older adults with legitimate health needs.
Finally, everyone, not just providers, must become aware of this issue. It’s critical that family caregivers and the general public understand the potential for and consequences of prescription drug abuse among older adults. Among older adults ages 50-64 who abuse painkillers, 42 percent get them from friends or family (figure 2). Addressing prescription drug abuse among older adults will require everyone working together.
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.
The just-released Senate bill, Better Care Reconciliation Act (BCRA), is very bad news for older adults. The bill reduces financial assistance (premium tax credits and cost-sharing subsidies) and changes rules on how much premiums can vary by age (age-rating). As a result, people ages 50 to 64 would have to pay thousands of dollars more in premiums to buy health insurance in the individual (non-group) market.
Here are four ways the bill would increase the cost of health insurance for older adults ages 50-64:
#1: Older adults would pay five times more than other adults.
The bill would allow insurers to charge people 50 and older up to five times more than younger adults (as opposed to up to three times more under current law) – known as 5:1 age-rating. We estimate that this change alone would increase older adults’ premiums by over $4,000 a year on average across all states.¹
But the bill does even more to make coverage unaffordable.
#2: Many older adults would no longer qualify for premium assistance and would have to pay significantly more.
Starting in 2020, the bill would eliminate premium tax credits for people who earn between 350 percent and 400 percent of the federal poverty level (FPL), which corresponds to incomes between $42,210 and $48,420 in 2017.
When the bill is in effect, a 60-year-old earning $45,000 would have to pay $11,800 more a year in premiums than they would under current law just to keep the same level of coverage he or she has today (Table 1). Their premium under BCRA would be $16,133 a year – over a third of their annual income and more than three and a half times what they would pay under current law. The impact of this change would be even worse in some states, especially in rural areas and parts of the country where health care costs are high (see Table 2 for premium increases in all states). In West Virginia, for instance, that same 60-year-old would end up paying $22,530 a year, which is nearly $18,200 more than what they would pay under current law. In Alaska, a 60-year-old who loses eligibility for this assistance would pay $37,700 a year for the same coverage – a whopping $31,600 more a year than under current law.
#3: Older adults eligible for premium assistance would receive much less financial help.
The BCRA significantly reduces premium tax credits for people that still qualify for financial assistance; consequently, millions of older adults would pay a lot more under the bill. Current law protects people with lower and moderate incomes by capping their premium payments. The Senate bill would increase the cap for older people and require them to contribute more of their income. In addition, under current law, the amount by which a person’s premiums are reduced (the tax credit) is based on the price of a silver plan. Under the Senate bill, tax credits would be based on the price of a bronze plan. Don’t be fooled by the technical nature of this change – it has huge implications. Since bronze plans costs less (because they cover less) than silver plans, this means that tax credits under the BCRA would be far smaller than under current law.
As a result, even those qualifying for tax credits would face higher premiums. A 60-year-old earning $40,000 would have to pay $4,500 more in 2020, –an increase from $4,000 under current law to over $8,500–, just to keep the same level of coverage.
#4: Older adults with lower incomes would no longer receive critical cost-sharing reductions to afford their care.
And finally, the bill eliminates subsidies that nearly 70 percent of 50-to-64-year-olds with premium tax credits receive. These subsidies, known as federal cost-sharing reductions, are available to people with incomes at or below $31,250 a year. They help them pay for out-of-pocket costs like deductibles, coinsurance, and co-pays. Eliminating these cost-sharing reductions means that a person earning $20,000 a year could face up to $4,500 more in out-of-pocket bills. This increase would be in addition to the increase in premiums they would face!
Here is the bottom line: Under the Senate’s Better Care Reconciliation Act, all older adults would face significantly higher costs for individual coverage.
Lina Walker is vice president at the AARP Public Policy Institute, working on health care issues.
Claire Noel-Miller is a senior strategic policy adviser for the AARP Public Policy Institute, where she provides expertise in quantitative research methods applied to a variety of health policy issues related to older adults.
Jane Sung is a senior strategic policy adviser with AARP’s Public Policy Institute, where she focuses on health insurance coverage among adults age 50 and older, private health insurance market reforms, retiree coverage, Medicare supplemental insurance and Medicare Advantage.
Olivia Dean is a policy analyst with the AARP Public Policy Institute. Her work focuses on a wide variety of health-related issues, with an emphasis on public health, health disparities, and healthy behavior.
¹Calculations by AARP Public Policy Institute, based on premium data from the Kaiser Family Foundation. Estimated premium increases are for 2020 if people keep their current silver level of coverage.
If you have protection against future catastrophic out-of-pocket costs for basic life functions, consider yourself lucky. The vast majority of people in the United States don’t.
Yet the reality is that there’s a 52 percent chance that someone turning 65 today might develop a severe disability requiring long-term services and supports (LTSS)—that is, help with such functions as eating, bathing, dressing, and toileting.
For more extensive care, the cost can surpass $250,000 for those over the age of 65—a figure that could easily decimate even some middle-class families, never mind lower-income earners. As a result, many people deplete their resources, become impoverished, and wind up needing relief from Medicaid as a last resort. Thus, millions of Americans, many of whom you might never have guessed would need Medicaid, find themselves having to turn to the half century-old program for this vital support. But at least that safety net is there.
However, if some in Congress get their way, that safety net may disappear, a position AARP firmly opposes. Provisions in the most recent House health reform proposal threaten to roll back the federal promise of coverage and services for millions of Americans, including at least 17 million children and adults with disabilities and low-income older adults who rely on Medicaid. Meanwhile, the proposal would instead shift more costs to states and their taxpayers. In short, hanging in the balance of a debate raging in Washington is $880 billion in federal funding for crucial health care and LTSS.
Responsive Medicaid Would Turn Rigid
For more than 50 years, Medicaid has served as a critical safety net for millions of people with limited income and resources. Current law guarantees access to health care and LTSS to all eligible individuals. States and the federal government share the risk, responsibility, and cost of financing Medicaid. The federal government guarantees states financial support, based on the relative wealth of the state, of between 50 and 75 percent of the program’s cost, even if cost goes up.
The program responds to changes in the economy, public health outbreaks, natural disasters, and medical cost growth. During the Great Recession when millions lost their jobs—and their employer-based health insurance—Medicaid served as a critical safety net. And as the Zika virus spread throughout the U.S. recently, Medicaid responded with the necessary funding.
In its current form, the House health legislation would fundamentally alter the program by changing the financing structure to a per capita cap. Under such a system, the federal government would set a maximum limit on how much to reimburse states on a per-enrollee basis for children, adults, individuals with disabilities, and seniors. While payments to states would reflect changes in enrollment, the cap would shift the risk to states for higher-than-expected cost growth due to epidemics, blockbuster drugs, and natural disasters. In addition, the cap would not account for the changing mix of an aging population. As we get older the needs for LTSS will go up, but budgets will not. Setting the caps at a time when per-beneficiary spending for low-income seniors is much lower would result in an underfunded safety net for this population.
Just in the event this was not drastic enough, House leaders are now willing to modify the health legislation and provide states with the option to accept Medicaid block grants—which is a fixed amount of Medicaid funding annually, regardless of actual need or program costs. Under a block grant, people are not guaranteed coverage for services, and funding would not necessarily keep up with health care costs, nor would it be adjusted based on the number of persons served.
The Real Face of Any Savings: State Taxpayers and America’s Most Vulnerable
While block grants and per capita caps on the surface appear to be a mere change in how funds are allocated for Medicaid, thereby saving federal dollars, and allowing greater state flexibility in program implementation, such a shift would result in a program that would be in many ways unrecognizable, both philosophically as well as “on the ground,” where Americans rely on the program every day.
Analyses from the Congressional Budget Office estimates federal spending in Medicaid would decrease by $880 billion by 2026. These cuts could have major implications for state budgets and the ability of states to provide adequate health care and LTSS for low-income seniors and people with disabilities. States and their taxpayers will either have to fill this gap themselves, or fewer people will receive less support for services like LTSS.
Faced with some difficult choices, states may limit optional benefits like home- and community-based services (HCBS), which is generally more cost-effective than long-term care facilities.
The bottom line: Members of Congress will vote on the health legislation later this week.
The Medicaid piece of the new health legislation means that access to services for some of the most vulnerable populations in our society, guaranteed for over a half-century, would be in jeopardy. It would also shift costs to taxpayers at the state level, which is one reason some governors feel the need to oppose it, regardless of their political affiliation. Now is the time to act and voice your concerns. There is just too much at stake.
Debra Whitman is AARP’s chief public policy officer and leads policy development, analysis and research, as well as global thought leadership that supports and advances the interests of individuals age 50-plus and their families. Follow Deb on Twitter: @policydeb
Jean Accius is a nationally recognized expert on aging policy, livable communities and long-term services and supports (LTSS). He currently serves as the vice president of the long-term services & supports and livable communities group within the AARP Public Policy Institute. Follow Jean on Twitter: @JeanAccius