Healthcare prices rising
The latest leak of a 106-page draft shows House Republicans are serious about repealing and replacing the Affordable Care Act. The proposal lays out plans to completely roll out a new healthcare system by 2020.
Although the plan is yet to be finalized, key provisions indicate that older Americans may lose out – possibly paying five times more than young adults for medical coverage.
Middle-aged and senior Americans already shoulder the highest premiums in the healthcare market. Under the current ACA, plans are permitted to charge older Americans no more than three times as much as a standard premium. In addition to an expected premium increase, up to 15 million more Americans are at risk of losing their Medicaid coverage.
The State Age Rating Flexibility Act
Providing fair coverage to older consumers has long been a challenge for legislators and insurers. Older age groups come with greater risks, including more doctor visits, hospital stays and expensive pre-existing conditions. To keep coverage affordable, the ACA imposed a limit on the increase in rates for older consumers, but with the potential of the State Age Rating Flexibility Act of 2017, that limit might end.
What would this mean for those covered through the ACA marketplace? In short, the new healthcare proposal favors individuals and younger Americans, lowering their premiums and eliminating the individual mandate (the fee for opting out of insurance). All of this will come at a cost to senior patients, who may lose existing coverage or face premium hikes beyond their budget. The average family premium is also expected to rise.
The Healthcare “Age-Tax”
According to a new study by the AARP, the new act is an “age-tax” that would cause adults over the age of 60 to spend $3,200 more on healthcare, bringing the annual average premium to $17,900.
Health insurance companies are in favor of the new act, as it would reduce premiums for younger consumers who are arguably healthier and in need of fewer medical services. Studies show that during the last year, people over 55 used three times more insurance coverage as those between 26-34. James Capretta, former budget advisor to President George W. Bush, argued that older people can afford to pay higher premiums than young people as they’ve had the capacity to work and save.
Older Americans are increasingly foregoing coverage because of premium increases. This is particularly true for those over the age of 60, many who are simply “hoping for the best”. Rand economists estimate that 700,000 people over 47 would drop coverage if the “age-tax” were imposed.
Reduced coverage also brings up another concern – uncompensated care may lead to greater burdens on hospitals and doctors in the long run.