Trump Health Plan Helps Young Middle Class at Cost of Old, Poor: CBO

  • People age 50 to 64 would be largest share of uninsured
  • Legislation faces headwind from report showing coverage losses

Among the biggest beneficiaries of President Donald Trump’s health care overhaul would be young, middle-class Americans. People over 50 and lower-income people would be the hardest hit, according to a Congressional Budget Office report issued Monday.

Trump and House Republican leaders’ plan to repeal and replace Obamacare would change subsidies for health insurance under the law, basing the assistance on age rather than income. Changes in the structure of the program also would push up insurance premiums for older beneficiaries.

The result is that a 40-year-old making $68,200 would see her net insurance premiums fall by about $4,000 a year while a 64-year-old making $26,500 a year would see his health costs increase nearly $13,000, according to the CBO’s estimates.

The House bill faced opposition from all sides even before the CBO estimated on Monday that it would increase the number of Americans without insurance by 14 million in 2018 and 24 million in 2026. Within the Republican Party, some lawmakers say the bill doesn’t go far enough to repeal the Affordable Care Act and overhaul Medicaid; others say they can’t support such a severe reduction in insurance coverage. It is unclear if there are enough votes in the House to pass the bill, much less the Senate.

Families can face burdensome premiums under Obamacare, making just enough to leave them without any subsidy for their insurance. A family of four earning $100,000, for example, doesn’t qualify for any subsidy and would have to pay at least 13 percent of their income for health insurance under current rules, said Cynthia Cox, associate director for health reform and private insurance at the Kaiser Family Foundation, a nonprofit research group in Menlo Park, California.

The income-neutral subsidies under the Republican plan would provide more help to such middle-class families.

“Making this affordable for the younger, higher income people is coming at the expense of those with lower incomes,” Cox said. The House bill “would certainly benefit that group of upper middle income people for whom insurance has been out of reach as opposed to the ACA where the people buying tended to be lower-income because of the subsidies.”

Trump will discuss the legislation with his health secretary, Tom Price, and Anthem Inc. CEO Joseph Swedish by phone this afternoon, followed by a call with House Speaker Paul Ryan and House Majority Leader Kevin McCarthy. Anthem is the only large insurer so far to endorse the House bill.

Ryan isn’t planning to make any major changes to the Republican legislation despite the CBO estimate of its impact on insurance coverage, according to a GOP aide.

Age-Based Subsidies

Republicans chose to base the health tax credit on age instead of income in order to draw younger, typically healthy customers into insurance markets. Their legislation would eliminate Obamacare’s tax penalty for not carrying insurance, which has proved to be less effective than once thought at coaxing young people into insurance markets. Obamacare premiums have risen faster than expected as a result. 

But basing tax credits on age also has the effect of pushing older people out of insurance plans. A 64-year-old would face an estimated net premium, after the tax credit, of $14,600 a year, the CBO said. The House bill would also allow insurers to charge older customers five times more for coverage than younger customers, up from a three-to-one ratio under Obamacare.

For a QuickTake Q&A on repealing Obamacare, click here.

With fewer older customers in insurance markets, premiums should fall by about 10 percent by 2026, the CBO said, because older people tend to have higher medical costs.

That’s a sharp change from Obamacare, which offered larger premium subsidies to lower-income people and little or nothing for upper-income customers. Under the Affordable Care Act, people earning $26,500 a year have a net premium, after tax credits, of $1,700 a year regardless of their age.

Trump held a meeting at the White House on Monday with nine people who could be considered losers under Obamacare: small-business owners and two-income households who qualified for little or no subsidies under the law.

Obamacare Losers

They had seen their premiums skyrocket and blamed Obamacare. Brittany Ivey of Georgia said her private insurance premium rose 110 percent between 2009 and 2015 before it was canceled by her husband’s employer. Ivey went back to work to help pay for coverage sold through Healthcare.gov, the federal insurance exchange, which cost her family $1,300 a month. Even at that price, she said her doctors wouldn’t take her insurance. Her family’s annual income is $74,000, she said.

Ivey’s family of four receives an Obamacare subsidy, according to the White House. In Georgia, a premium of $1,300 would pay for a Gold plan for most such families, the second-most generous level of coverage. A Silver or Bronze-level plan would be cheaper.

Gina Sell said that after her insurance was canceled she considered quitting her job as a part-time nurse to qualify for a subsidy. Instead, she went to work full-time to get insurance through her employer, but she said she can’t afford the deductible of $6,500. She recently sent her daughter to school with a fever because she had to go to work and couldn’t afford to take her to the doctor, she said

“I’m part of the huge group of middle-class families impacted by the ACA,” said Sell. “It has been devastating for our family,”

‘Very Small Number’

But absent from the conversation at the White House were the millions of people who have been able to afford coverage because of the Affordable Care Act’s income-based subsidies, and who face the biggest risk of increased costs.

People between the ages of 50 and 64 earning less than twice the federal poverty limit -- about $32,480 for a family of two this year -- will make up the largest proportion of the 24 million Americans estimated to lose their insurance by 2026, according to the Congressional Budget Office.

Medicaid, the health insurance plan for the poor and disabled that was expanded under Obamacare to cover more low-income adults, would see cuts that would reduce its enrollment by 14 million, or 17 percent, by 2026, the CBO said.

Trump is dismissive of the idea that many Americans have benefited from the Affordable Care Act.

“You have a very small number of people who are happy,” Trump said at Monday’s White House meeting. “That I can tell you.”

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