From the perspective of older adults, there is little good to say about the House Republican health care bill. The American Health Care Act (AHCA) would significantly raise insurance costs for people in their 50s and 60s, reduce important Medicaid benefits for the frail elderly, and put more financial pressure on Medicare.
Last week, I took a first look at what the plan would mean, but we have more information about the effects of the AHCA, so let’s take a closer look:
Individual health insurance: The AHCA makes major changes in the non-group market and several are aimed directly at seniors. Overall, it would reduce Affordable Care Act subsidies by $680 billion, or one-third, and replace the ACA’s tax penalties for those without insurance with a temporary premium increase for those who allow their coverage to lapse. These and other changes would reduce the number of Americans with commercial insurance by 8 million in 2018, according to a new report by the Congressional Budget Office.
The plan would make it more expensive for many people in their 50s and 60s to buy individual insurance. It would base new tax credits to help cover the cost of insurance on age rather than income, as the ACA’s credits are. Buyers in their 20’s would get credits worth up to $2,000 while those in their 60s would get credits of up to $4,000. The credits would phase out for everyone who makes $75,000 or more ($150,000 for couples).
At first glance, that sounds pretty good. But if you are a low- or moderate-income consumer who is too young to qualify for Medicare, it is a much worse deal than the ACA. The Kaiser Family Foundation estimates that a 60-year-old making $40,000-a-year is eligible for an ACA tax credit of $6,742. But under the AHCA, she’d get only $4,000.
That’s not all. Under the ACA, insurers may charge older consumers premiums that are no more than three times the price for young buyers. The AHCA would allow them to charge up to five times as much. AARP estimates that the all-in price (including the credits and the premiums) would increase by as much as $3,600 for a 55-year old earning $25,000-a-year. CBO finds that a 64-year-old making $26,500 would pay $13,000 more under the AHCA. Because the subsidies phase out more quickly under the ACA than they would under the AHCA, some higher-income 60-year-olds would pay lower overall premiums.
The AHCA also would penalize people who go without insurance for 63 days in a year. They could still buy coverage but would have to pay a 30 percent surcharge for one year. Imagine a 60-year-old who loses his job, and his insurance. Faced with a 30 percent premium on top of very high-cost insurance he is likely to take his chances and go uncovered.
Overall, the AHCA would encourage more younger healthier people to enroll, but it would discourage many older consumers from buying. CBO projects that the uninsured rate for a single person aged 50-64 making $30,000 or less would rise from about 12 percent to 30 percent. For higher income people of that age, it would increase from about 7 percent to about 12 percent.
Medicare. The House GOP plan would repeal a 0.9 percent tax on Medicare that the ACA levied on high-income workers. This would reduce revenue to the Medicare trust fund about $117 billion over 10 years, accelerating the date the fund is insolvent by 3 or 4 years. In addition, since more people in their 50s or 60s would go without insurance, they’d be less likely to get needed medical treatment—raising their health care costs once they become eligible for Medicare.
Medicaid: The House GOP bill would reduce federal funding for Medicaid by $880 billion over the next decade, according to CBO. But since the change would not begin until 2020, the CBO projection underestimates the true cost. In 2026 alone, the federal payment would be cut by $155 billion.
The AHCA would make these cuts by capping the amount of money the federal government contributes for each Medicaid enrollee. Frail elders would be subject to one cap, while moms and kids would be subject to a different limit.
Such a cap would hurt frail elders and younger people with disabilities in two ways. First, pulling money out of the system would reduce the amount that states could pay providers, such as home health agencies and nursing homes, for their services. This would likely reduce the quality and amount of care they could provide.
Second, it would curtail the growing use of home and community based care. That’s because states are required to provide long-term care in nursing homes, while providing care to people in their homes is optional. With limited resources, states are likely to focus scarce dollars on mandatory programs rather than on popular, but optional, ones. I’ll have more to say about this in a future blog.
The AHCA will reduce health coverage for millions of low- and moderate-income people. But older adults may be among its biggest victims.