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ACA Replacement Bill: More Bad News for Older Adults

As we’ve already reported, the proposed replacement for the Affordable Care Act (aka Obamacare) would lead to higher premiums and less financial help for older adults who buy insurance on their own because they’re not yet eligible for Medicare.

The nonpartisan Congressional Budget Office recently calculated the details in its analysis of the proposed law, the American Health Care Act. (You can read its whole 37-page report here.) Its bottom line: Both premiums and out-of-pocket expenses will go up by thousands of dollars a year for older Americans with low or moderate incomes.

Here’s how, according to the CBO

Premiums would rise by 10 to 20 percent for the next two years, during which the main features of the ACA would remain in effect. That’s because the proposed law would do away with Obamacare’s penalty for not having health insurance.

Some younger, healthy people would decide to go uninsured, so insurers would have to raise their rates to cover the higher costs of the older, sicker people who hang onto their health plans.

What’s more, if your income makes you eligible to get help paying your premiums, as an older person you’ll be expected to fork over a higher percentage of your income than a younger person.

In 2020 and beyond, insurers will be able to charge older customers five times as much as younger ones. Right now, under Obamacare, it’s only three times as much. By 2026, the Congressional budget experts project premiums will be 20 to 25 percent higher than they are now for the oldest consumers—but 20 to 25 percent lower for the youngest ones.

On top of that, premium subsidies will no longer be tied to income or the local price of insurance. Instead, people age 50 through 59 will get a flat $3,500 a year, and people over 60 will get $4,000, which isn’t nearly as much as they’re accustomed to getting under Obamacare.

Over the weekend, Speaker of the House Paul Ryan, the chief author of the AHCA, said he was planning on tweaking the bill to increase financial help for lower-income older adults. Details have not yet emerged.

Another hit is that the new law would do away with the subsidies that cut out-of-pocket costs—deductibles, copays and the like—for lower-income consumers.

The proposed law also would relax the ACA’s rules about how generous plans have to be. Essentially, the only plans available on the individual market would have high deductibles of roughly $6,000 or $7,000. Ryan has not mentioned any plans to change this part of the bill.

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The bottom line

The proposed changes would be grim for older consumers of modest means. The CBO projects that in 2026, a typical 64-year-old earning $26,500 would have to pay $14,600 in premiums alone—more than half his or her income—compared with $1,700 today.

But higher-income consumers would come out slightly ahead financially. A 64-year-old earning $68,200, which is too much to get any help from Obamacare, would be paying the same $14,600. That’s actually about $700 less than he or she is paying today.

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