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.



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State High-Risk Pools Failed Consumers in the Past—and They’d Fail Them Again

State High-Risk Pools Failed Consumers in the Past—and They’d Fail Them Again


Photo courtesy of iStock

The  American Health Care Act (AHCA) threatens to do away with the Affordable Care Act’s (ACA) protection for people with preexisting health conditions. This provision prevents insurance companies from denying these individuals coverage.

Eliminating this protection would force millions of Americans to—once again—rely on state high-risk pools. State high-risk pools are supposed to provide access to health insurance for people who cannot get coverage in the individual health insurance market because of preexisting health conditions.

State high-risk pools may sound like a good idea but, in reality, they are fraught with problems. One of the biggest lessons learned from experience with state high-risk pools: steep premiums that put coverage out of reach for millions. In the past, monthly premiums in state high-risk pools could be up to 200 percent higher than in the individual (non-group) market. Consequently, only a small fraction of those with preexisting conditions could afford to buy a plan. Yet, these premiums—high as they were—only covered about half  the amount needed to pay enrollee claims. Most states tried to close the financial gap through taxes on providers and government subsidies, but even those efforts proved insufficient. We project that if states return to pre-ACA high risk pools in 2019, premiums for people with pre-existing conditions could be as high as $25,700 annually.¹

Another problem with state high-risk pools was that they typically offered skimpy coverage. For example, people who bought insurance through high-risk pools in nearly all states that offered them had to wait between six and 12 months before their preexisting conditions were covered. In addition, many had annual dollar limits on coverage for prescription drugs and behavioral health services.

The AHCA would provide $100 billion over nine years to fund—among other things—state high-risk pools. This level of funding is woefully inadequate to meet the need. One study estimates that it would cost at least $178 billion a year to adequately fund high-risk pools today. In the current policy environment, it is unlikely that the federal government will provide the necessary funding to make state high-risk pools work for the millions of people with a preexisting condition.

Bringing back insurers’ ability to consider preexisting conditions would hit older people especially hard—since people tend to have more health problems as they age; but younger people could be hurt by these policies too. Thus, the ban on preexisting conditions is an important protection for people of all ages. It’s time to stop recycling bad policies and come up with solutions that work for everybody.

 

Lynda Flowers is a senior strategic policy adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

 

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.

 

 

 

 

 

[1] Calculations by AARP Public Policy Institute. Estimate derived as follows: State-specific average premium data in 2010 obtained by dividing total premium revenues over total enrollment in each state high-risk pool. The average premium was inflated to 2019, when the AHCA would allow high-risk pools, using actual and projected per capita growth rates from direct purchased private health insurance from CMS Office of the Actuaries.

 

 



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