Thought the debate over the health law was over? Not quite. Yes, Congress has shifted its focus from health care to tax reform over the past couple months. But health care faces new threats under the latest proposed tax legislation.
The Tax Cuts and Jobs Act as reported by the Senate Finance Committee on Nov. 16, 2017 includes a new provision that would both reduce health care coverage and increase costs for millions of Americans. Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of $1,500 in 2019 as a result of the bill.
Older Adults Would Face Higher Premiums
The new provision in the Senate tax bill effectively eliminates the current health law’s requirement that most people have health insurance coverage. Lawmakers are inserting this change into the tax debate to help pay for other changes they want to make to the tax code.
Unfortunately, this change will mean higher premiums for everyone who needs to purchase coverage on the individual (non-group) health insurance market. The non-partisan Congressional Budget Office (CBO) estimates that premiums will increase by an average of 10 percent, thanks to the pool of people continuing to purchase health insurance coverage being less healthy on the whole.
The impact will be especially hard on older adults, who will see the largest price increases even though they already pay premiums up to three times higher than others. As a result of the tax bill, for federal Marketplace coverage in 2019*:
- Premiums for 50-year-olds could increase by an average $890, rising to $9,780 a year.
- Premiums for 55-year-olds could increase by an average $1,110, rising to $12,200 a year.
- Premiums for 60-year-olds could increase by an average $1,350, rising to $14,860 a year.
- Premiums for 64-year-olds could increase by an average $1,490, rising to $16,420 a year.
Actual premium increases will vary by state, with some states seeing much higher increases for older adults. In Maine, a typical 64-year-old could see her premiums increase an average $1,750 a year (to $19,220), while in Alaska, she could see her premiums increase an average $2,150 a year (to $23,650).
13 Million Fewer Americans Would Have Health Insurance Coverage
Eliminating the health care coverage requirement would also mean that millions more Americans will become uninsured. CBO has estimated that 4 million people under age 65 would no longer have health insurance coverage as early as 2019 if this provision is enacted. By 2027, that number would rise to 13 million people left without coverage.
Since enactment of the ACA, the uninsured rate for 50- to- 64-year-olds has fallen significantly, from 15% in 2013 to 9% in 2016. The Senate tax bill provision threatens to reverse these critical coverage gains, meaning a harmful step backward for older adults.
The bottom line – the new health care provision in the Senate tax bill will increase premiums for older adults and lead to millions more uninsured.
* Calculations by AARP Public Policy Institute
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, Medicare Advantage, Medigap, and employer and retiree health coverage.
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 private coverage.
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.
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.