People over 50 and those with pre-existing conditions could pay more for their health insurance, according to a recent television ad backed by AARP.
The 30-second features a couple talking with a financial planner about their healthcare premiums in a world where the healthcare reform bill passed by House Republicans in May has become law. (Note this hasn’t actually happened yet).
The couple discovers that their ages and the husband’s asthma are going to cost them.
“This is going to be a big bill,” the accountant tells them.
Colorado’s version of the ad ends by telling viewers to call Sen. Cory Gardner (R-Colorado) and urge him to vote against the American Health Care Act when it comes before the Senate.
CLAIM: “If you’re over 50, insurance companies can charge you five times more. It’s an age tax.”
The ad says you can be charged five times more, but it doesn’t explain how that works.
The Affordable Care Act (known as Obamacare and passed in 2010) let insurance companies charge people over the age of 50 three times more than people under the age of 21 for insurance because of the idea that older people use more health care.
The Republican plan changes that ratio to 5:1.
This means the new plan would let insurance companies increase premiums for older people, but it isn’t five times more than they’re paying today, it’s just five times more than a younger person.
The Republican plan actually represents a potential 66 percent increase over today’s pricing for older people.
The big question is whether premiums would actually increase by that amount.
Republicans say no and point to a Joint Economic Committee report called The Myth of the Senior Tax.
It says the 3:1 ratio actually raised premiums for younger Americans and pushed them out of the market.
That’s backed up by a report from the non-partisan Congressional Budget Office that estimated a 65-year-old spends about 4.8 times as much on healthcare as a 21-year-old.
The Republican plan is, in theory, a return to more of a market based rate for older Americans. And the committee report claims a 66 percent increase wouldn’t happen because the rate for 21-year-olds would drop, theoretically bringing all prices down.
AARP’s own research report from the Milliman Group agrees on that point.
Milliman estimated Americans older than 50 would see their annual premiums rise by $1,500 or 13 percent. People over 60 would see a $3,200 or 22 percent increase.
“Older adults who do not qualify for tax credit subsidies would feel the full impact of these premium increases,” according to the report. “Those eligible for premium tax credits, however, may face smaller or no premium increases, depending on the level of their subsidies.”
AARP’s concern is those rate increases could push the cost of insurance beyond the financial grasp of thousands of older Americans.
Who qualifies for a subsidy?
People whose income is between 100 and 400 percent of the federal poverty level, according to the Internal Revenue Service.
- $11,770 to $47,080 for an individual
- $15,930 to $63,720 for a family of two
- $24,250 up to $97,000 for a family of four
CLAIM: Insurers would be able to charge thousands more for pre-existing conditions
You could face a steep increase in your premiums and/or out-of-pocket expenses if you have a pre-existing condition, but it’s going to depend on where you live and what kind of insurance you have.
The Republican plan allows states to get different kinds of waivers.
The first deals with a list of essential health benefits Obamacare mandated every insurance plan cover. These included things like prescription drugs and emergency room care.
That’s coverage you might need if you have a pre-existing condition like the man in the ad who says he has asthma.
The waiver would let states ask the federal government to remove some of those requirements. The idea came from Rep. Tom McArthur (R-New Jersey).
But states still couldn’t drop whatever coverage they wanted.
They’d have to meet certain conditions like showing it would lower premiums, increase plan choice and have a plan in place to help people affected by the change pay for coverage.
The second waiver deals with people who let their coverage lapse for 63 days or more in a year.
This one would let insurance companies take a person’s health into account when deciding how much he or she should pay in premiums for one year.
It could be a substantial jump in price if someone had a chronic illness or disease, but it will depend on what his or her state decides to do.
How many people might that affect?
The Commonwealth Fund estimated 30 million adults had a gap in coverage like that in 2016.
For context, a National Health Interview Survey conducted by the Centers for Disease Control estimated nearly 300 million Americans had health insurance in 2016.
This ad points to real parts of the healthcare bill, but it oversimplifies the "age tax" argument so much that it's misleading. And it leaves out important details on pre-existing conditions.
A side note to all of it: There's a good chance the Senate's going to change a bunch of things, so the details we just went over may or may not apply in the end.