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GOP Health Reform is Real Disaster For Older Americans

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The AHCA falls well short of Trump’s promise to pass health reform that provides “insurance for everybody.”  

By Mark Miller

The Republican leadership in Washington says Obamacare is an imploding disaster. But if your income is low and your age is high, the real disaster is the repeal-and-replace healthcare reform bill on offer from U.S. President Donald Trump and House of Representatives Speaker Paul Ryan.

The official congressional report card on the proposed American Health Care Act (AHCA) was released this week, and it concludes that older, low-income Americans will be its biggest losers — ironically, many of the households that supported the president’s bid for the White House.

The AHCA will jack up premiums for older low- to middle-income users of the commercial insurance exchanges, and roll back Medicaid coverage for very low income households, according to the nonpartisan Congressional Budget Office (CBO).

Just as important, the AHCA proposes massive Medicaid funding cuts that would reduce available financing for nursing home care in the years ahead — just as demand for care is due to explode.

Overall, the CBO found that 24 million Americans would lose health insurance coverage in 2026, if the plan being considered by the House of Representatives to replace the 2010 Affordable Care Act were adopted. The coverage loss would fall disproportionately on older people with low income, the report found. The bill would remove the individual mandate requiring people to buy insurance — and it would make exchange —purchased insurance plans more expensive.

First, it would loosen current restrictions on “age rating” — the extra amounts that insurers can charge older customers. Under former President Barack Obama’s Affordable Care Act, insurers can charge older enrollees three times as much as younger ones. Under the AHCA, they could charge five times as much.

Second, the AHCA repeals the Obamacare subsidies that offset premiums for many lower- and middle-class buyers based on income, and replaces them with flat tax credits based on age. The change will not impact higher-income and younger buyers much — and it could even reduce premiums in some cases, the CBO found.

But premiums for a 64-year-old earning $26,500 would increase by an eye-popping $12,900 in 2026, from $1,700 a year now to $14,600, CBO reports. “There’s no way someone can increase their premiums by that amount and still eat and have a roof over their head,” said Debra Whitman, executive vice president for policy at AARP, which is battling the AHCA alongside associations representing physicians, hospitals and insurers.

Shortsighted Reform Bill

The political justification for all this is that the ACA is a “disaster,” as the president and Ryan have put it. They point to states where premiums have soared by more than 100 percent and insurers have dropped out of the markets. While some state exchanges have experienced these problems, that criticism is overstated.

“There’s no question that the current system could be improved by stabilizing risk pools, but it isn’t in a state of utter collapse,” said Dan Mendelson, chief executive officer of Avalere Health, a healthcare consulting and research firm that studies the exchanges. “There are some markets that are difficult, but that is the exception rather than norm.”

Meanwhile, the AHCA proposes a fundamental transformation of Medicaid that would slash resources available to states to help cope with aging populations.

Currently, Medicaid is jointly funded by states and the federal government, with funding determined by actual healthcare spending need. Under the AHCA, federal funding to states would be capped on a per-beneficiary basis, based on what they spent in 2016, with specific targets for each category of Medicaid enrollees (the elderly, disabled, children and low-income adults), plus an inflation adjustment. The Center on Budget and Policy Priorities estimates that this provision would shift $370 billion in costs to the states over the next ten years.

“It locks in spending at the 2016 level,” said Whitman. “That might be OK for the first year or so, but we know that the boomer generation is at the early edge of aging — in ten or 15 years, it is going to be older, and needing a lot of services. But federal payments to states to meet that need wouldn’t expand.”

Medicaid is the nation’s largest funder of long-term care — in 2014, combined federal and state spending was about $152 billion, dwarfing the $9 billion paid out by private long-term insurance underwriters, according to AARP research. Capping the available dollars to meet long-term care need would force states to cut back spending or fill the gaps without federal assistance.

“The bill is so shortsighted,” said Stacy Sanders, federal policy director for the Medicare Rights Center, a nonprofit research and consumer advocacy group. “It shows a complete unawareness that we have an aging society.”

The AHCA also threatens Medicaid funding for a program that helps low-income seniors on Medicare pay for their healthcare. The Medicare Savings Program helps pay for Part B premiums and out-of-pocket costs. Although federal Medicaid dollars for the program are exempted from AHCA cuts, 12 states and the District of Columbia have opted to expand the program’s benefits by loosening asset or income eligibility tests, and those expansions could be threatened under AHCA, possibly impacting 2.4 million Medicare enrollees, according to an analysis by the Medicare Rights Center.

The AHCA falls well short of Trump’s promise to pass health reform that provides “insurance for everybody.”  From where I sit, it looks like bad policy and dumb politics, all wrapped up in one ultra-rushed bill. — Reuters

(The opinions expressed here are those of the author, a columnist for Reuters.)

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