Under the Senate Health Bill, All Older Adults Would Pay Much More for Individual Health Coverage

Under the Senate Health Bill, All Older Adults Would Pay Much More for Individual Health Coverage


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.



Source link

The Senate Health Reform Bill Slashes Medicaid Severely

The Senate Health Reform Bill Slashes Medicaid Severely


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter the Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. BCRA would subject older adults, adults with disabilities, and children to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly non-disabled non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps.  However, beginning in 2025, it would slash the growth rate to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. CPI-U does not tie closely to medical costs and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U— keep pace with the growth in Medicaid spending.

 

 

 

Although studies have examined the impact of Medicaid spending cuts in the House-passed healthcare bill over a 10 year period (e.g. [CBO] [CMS] [Urban Institute]) we know of none that examine the impacts over a longer time horizon. To fill this gap, the AARP Public Policy Institute has developed a model that looks out an additional decade to capture impacts on Medicaid spending between 2027 and 2036.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $2.0 and $3.8 trillion from total (federal and state) Medicaid spending over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, children, and non-expansion adults (children with disabilities are excluded because BCRA does not subject them to capped funding). A cut of this magnitude threatens the viability of the program in unprecedented ways and will increase the number of people who no longer have access to essential healthcare services and critical supports.  The projections do not include the proposed cuts to the adult expansion population, which would also be considerable.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave states and the poorest and sickest Americans holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though well short of what is needed to maintain the integrity of the Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.
  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.
  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.

 

In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

 

The charts below demonstrate that for any projection of the bill’s cap growth rates, BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children and adults. The end result is that states and beneficiaries will be left with severe funding shortages, and states will be forced to cut eligibility, provider rates, or covered services—or very likely all three.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 



Source link

The Senate Health Reform Bill Slashes Medicaid Severely

The Senate Health Reform Bill Slashes Medicaid Severely


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter the Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. BCRA would subject older adults, adults with disabilities, and children to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly non-disabled non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps.  However, beginning in 2025, it would slash the growth rate to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. CPI-U does not tie closely to medical costs and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U— keep pace with the growth in Medicaid spending.

Although studies have examined the impact of Medicaid spending cuts in the House-passed healthcare bill over a 10 year period (e.g. [CBO] [CMS] [Urban Institute]) we know of none that examine the impacts over a longer time horizon. To fill this gap, the AARP Public Policy Institute has developed a model that looks out an additional decade to capture impacts on Medicaid spending between 2027 and 2036.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $2.0 and $3.8 trillion from total (federal and state) Medicaid spending over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, children, and non-expansion adults (children with disabilities are excluded because BCRA does not subject them to capped funding). A cut of this magnitude threatens the viability of the program in unprecedented ways and will increase the number of people who no longer have access to essential healthcare services and critical supports.  The projections do not include the proposed cuts to the adult expansion population, which would also be considerable.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave states and the poorest and sickest Americans holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though well short of what is needed to maintain the integrity of the Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.
  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.
  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.

 

In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

 

 

The charts below demonstrate that for any projection of the bill’s cap growth rates, BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children and adults. The end result is that states and beneficiaries will be left with severe funding shortages, and states will be forced to cut eligibility, provider rates, or covered services—or very likely all three.

 

 

 

 

 

 

 

 

 

 

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 

 



Source link

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.

Photo: istock

 

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.

 

 

 

 



Source link

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.

 

 

 



Source link

Pin It on Pinterest