A new premium spike may be in store for those in their 50s and 60s.  As Republicans consider how to bring down costs for younger people, lawmakers are considering relaxing or eliminating the restrictions on how much more insurers can charge older Customers.  Middle-aged Americans already face the highest premiums in the health care markets for individuals who don’t get coverage from their workplace or the government.  Plans are permitted to charge three times as much for a 64-year-old as for a 21-year-old.
Last year, 3.3 million consumers ages 55 through 64 bought insurance on the marketplaces.  That was a quarter of all those covered, more than any other age group tracked by the federal government, data show.
The GOP has not unified behind a single plan, but one proposal last year by House Speaker Paul Ryan (R-Wis.) would let insurers make older people pay five times more than young adults.  Another plan offered by Department of Health and Human Services Secretary Tom Price when he was a Georgia congressman would do away entirely with age restrictions and instead give tax credits that increase by age.  House Republican leaders embraced a similar concept of tax credits this month.
The politics for Republicans are precarious as older voters are such an important part of their support.  More than half of consumers who bought insurance on the federal exchanges last year in Iowa, Ohio, Pennsylvania and Wisconsin — all important states in the presidential election — were 45 or older, according to a Kaiser Health News analysis.  Insurance purchasers in Florida and Michigan also trend older than in most states.
Many older customers think current prices are not fair.  “I’m in excellent health, I don’t live at the pharmacy,” said Susan Finney, a 59-year-old commercial real estate broker in Chesterfield, Mo.  “I’m a walker, four miles a day.”
Finney said her monthly premiums have risen from $490 to $793 since 2015.  “The health insurance companies are out of control,” she said.
Before the health law, insurers selling policies to individuals could base their premiums on several factors, including age, gender and health history.  That meant many states allowed ratios of 5 to 1 or even higher.
The insurance industry favors relaxing the age rules, arguing it will allow them to reduce rates for younger consumers, who are coveted because they tend to be healthier and thus use fewer medical services.  Last year 2.2 million people ages 26 to 34 obtained coverage on the markets — a third fewer than purchasers ages 55 and over.  The imbalance between young and older consumers is one reason premiums jumped in many markets this year.
Two studies predict changing the age rules to 5 to 1 would lead to double-digit spikes in premiums for older people and significant but smaller reductions for the young.  A major reason for the dramatic swings is that age is one of the few elements that insurers are allowed to consider when setting rates.  The 2010 health law barred insurers from considering most other factors, including the health and medical histories of people when setting rates and their genders.
The actuarial firm Milliman estimated that if insurers were allowed to charge older people five times more than young ones, adults in their 20s would see their annual premiums drop by $696 — 15 percent — to $4,008 next year.
But those savings would pale next to the added burdens on older people, Milliman said. Those in their 60s would see average annual premiums rise by 22 percent, growing by $3,192 to $17,916, according to Milliman’s projections, which were commissioned by AARP. That lobbying group for older Americans opposes loosening the age rules. A study last year by the Rand Corp. for the Commonwealth Fund, a New York foundation, projected up to 29 percent premium increases.
“People 50 to 65 are probably in their higher earning years, they’ve had the capacity to work and save more,” Capretta said. “People at 25 are just starting out, and we’re adding this additional burden on them.”
Others worry the changes might backfire by discouraging healthy older people from signing up. “Those are the very people you want to keep,” said Sabrina Corlette, a researcher at Georgetown University’s Health Policy Institute. “They’re healthy, and because they’re older, they pay a higher premium.”
Price suggested replacing income-based tax credits with age-based tax credits up to $3,000, but those wouldn’t even cover the premium increases anticipated by Rand and Milliman. It would be unlikely to be enough for someone like Robert Baker, a 59-year-old hairdresser in St. Louis, who says insurance costs are too high even though he qualifies for an income-related subsidy.
Baker said he did not buy insurance this year. The 2008 financial crisis wiped him out, he said, and he needs to sock away earnings for retirement. “If I spend most of that on insurance, I won’t have any money when I’m old,” he said.
For the full article by Jordan Rau and Julie Appleby, go to http://khn.org/news/gop-fix-to-insurance-markets-could-spike-premiums-for-older-customers/.
For more questions and concerns on this topic, contact the experienced lawyers at Courtney Elder Law Associates by calling 601-987-3000.