Update May 5: The latest version of this bill was narrowly passed in the House on May 4. The bill has most of the same features as the original, with some additional money thrown in to help people with pre-existing conditions, whose insurance can now go to market rates. The bill allows rates on people aged 50 -64 to increase dramatically. Now it is on to the Senate, which will probably produce its own version.
March 22, 2017 – The Republican controlled Congress and our new President have come out with their proposed replacement to the Affordable Care Act, aka Obamacare. Unfortunately for its proponents, the new bill, the American Health Care Act (AHCA), has run into considerable headwinds. The American Medical Association (AMA), hospital groups, the Heritage Foundation,the AARP, as many as 18 Republicans in the House and Senate, several Republican governors, and virtually every Congressional Democrat do not like the bill. In this article we will review how the proposed bill would affect baby boomers 50-64 who are not eligible for Medicare. Unfortunately, many of the folks in this group are retired (often involuntarily) and have very low incomes.
The Congressional Budget Office estimates that 14 million Americans of all ages would lose health insurance coverage in 2018 under the bill, rising to 24 million by 2026. On the plus side, about a third of a trillion dollars would be saved during that period, mainly because subsidies to lower income folks would be replaced with less generous tax credits. Although younger people would probably see net health premiums (after tax credits) go down with the Republican plan, people age 50-64 would see increases in premiums that are so high that many will have to go uninsured. At the same time the proposed bill gives wealthy people a big tax break by eliminating two Affordable Care Act taxes – increased capital gains taxes and a Medicare surcharge. The Joint Committtee on Taxation, a nonpartisan panel, estimates that people making over $200,000 a year would save $274 billion in the next decade with the provisions in the new bill.
Here is how the Republican bill affects people age 50-64:
– Under the proposed bill the CBO estimates that after any subsidy/tax credit the net annual premium for a single 64 year old with income under $26,500 would go from $1700 to $14,600 – more than half their income! A single person with income of $68,200 would see their net premiums go down slightly – $15,300 under the ACA vs. $14,600 under the new plan. (Note, not all plans would be this expensive, but the relative disparity would remain the same).
– If you have a very high income the new bill will save you some money in taxes, because you won’t have to pay the Obamacare surcharge (although insurers can charge you more).
– The AARP uses a slightly different scenario to arrive at similar results: they predict the average older American would pay $8400 more for health insurance under the Ryan/Trump bill. By their estimates a 64 year old making under $26,500 would see a premium increase of $12,900 by 2026.
– Part of the reason for the increase is that under the ACA, insurance companies could only charge older people up to 3 times the rate they charge younger ones; under the new plan the maximum goes up to 5 times.
– Tax credits under Obamacare gave more help to people with lower incomes and in higher cost areas. The Republican plan only considers age.
– Although coverage for pre-existing conditions cannot be denied under the new plan, if there is a 2 month gap in coverage insurers could charge up to 30% more. This is a potential problem for older people who might have let their coverage lapse due to money problems.
– The CBO estimates that the AHCA would cut Medicaid funding by $880 billion. Many seniors are already on Medicaid due to their low incomes, so they could lose coverage unless the states step in to make up the difference. An unseen threat that hasn’t been mentioned much is the effect it will have on low income seniors currently in nursing homes whose monthly charges are paid by Medicaid. Presumably many of those people could lose that support, and many more would never get enrolled in the program (better tell the kids to keep that spare room ready!)
What happens next
The President and House leaders say they are willing to make changes to the bill to get it to pass, which is scheduled for a vote on March 23. Both Speaker Ryan and the President are working hard for passage. Minor changes announced on March 20 were mostly concessions to get conservatives behind the bill. One potentially helpful change mentioned would increase tax credits for older people, although details on this would be pushed to the Senate for resolution. Note that tax credits do not help people who have little income.
The problem is that any changes to make the bill even more strict to get conservatives on board will probably drive more moderate Republican Senators further away from it. Although the House might be able to pass a replacement bill, the votes are probably not there in the Senate. While that might be viewed as a good thing for those who would be grateful to see their coverage continue under Obamacare, it might not be. That is because if the Congress keeps chipping away at the underpinnings of the ACA, it, and the private insurance market, could be further undermined.
AARP Not Happy
The AARP published results of a poll conducted by the Benenson Strategy Group of people over age 50 who voted in the last election. More than half of all respondents (55%) — including a majority (51 percent) of older Trump voters — agree that allowing insurance companies to charge people ages 50-64 five times as much as younger adults for the same coverage amounts to an age tax on older Americans. “Older Americans want affordable health care, including less-expensive prescription drugs and continued protections for the most vulnerable,” said AARP Executive Vice President Nancy LeaMond. “When Americans over age 50 look at the details of the House health care reform plan, they don’t like what they see. They don’t want big insurance and drug companies to reap massive profits at their expense.”
What should you do?
– Don’t get sick. Sure, many if not most health issues are due to back luck and genetics. But you can control a lot of things about your health. Eat healthy, lose that extra weight, quit smoking, control your drinking, and get some exercise. Invest in a physical to get an early warning on any possible risks.
– If you are working and have company health insurance, try to keep working until you can get onto Medicare. Likewise, if you have private health insurance, hang on to it as long as you can. A lapse in coverage could be disastrous.
– Make your voice heard. This article has tried to give you the facts about the new plan as it affects people age 50-64. However you feel about the bill, let your elected representatives know if you support or do not support the bill. Calling their Congressional offices or attending town hall meetings are probably the most effective way to state your position.
At Topretirements we think this bill was terrible for a lot of people, especially folks ages 50-64. We are happy that it was not passed.
For further reading:
Proposed Health Care Bill Hammers People Over 50
AARP Opposes Health Care Bill
Kaiser Health News on CBO Estimates
Barely 1 in 3 Can Afford Medical Care
Trumpcare Big Bills Small Towns
Compare ACA vs. GOP Healthcare
GOP Plan Would Hit Rural Areas Hard
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