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You are here: Home / Anderson On Health Insurance / Age based subsidies and geographic disparities

Age based subsidies and geographic disparities

by David Anderson|  February 24, 201711:52 am| 31 Comments

This post is in: Anderson On Health Insurance, Fuck The Middle-Class, Fuck The Poor

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I am reading through the leaked Republican Reconciliation bill at Politico.  

P.66 has the replacement subsidies that are determined solely by age and do not reflect either income or local cost of coverage:

  • 18 to 29 — $2,000 year
  • 30-39 — $2,500 year
  • 40-49 — $3,000 year (note mid-40s is when the cost curve which is incresing from a 3:1 band to a 5:1 band starts getting expensive)
  • 50-59 — $3,500 year
  • 60+ — $4,000 year

There are major distributional impacts that will kick the Republican base voters in the teeth.  Most notably the increase of the age premium band from 3:1 to 5:1 will make insurance much more expensive for older insured individuals.  The subsidy band is only 2:1.

In Pittsburgh under the 3:1 band, a 29 year old can buy a catastrophic policy today for less than their monthly subsidy. A Bronze plan would cost $20 out of pocket every month and a Silver plan $47 per month.  Under the same banding, a 64 year old with their $333 non-income adjusted subsidy will be able to buy a catastrophic policy for $89 per month, a Bronze plan for $152 per month and a Silver plan for $211 per month.  This is a favorable set of assumptions for the 64 year old as the age banding is 3:1 instead of 5:1.  Less favorable assumptions would make the Silver policy cost $600 or more after subsidy for a 64 year old.  The only person who will buy that policy is someone who is already getting extremely expensive treatment in the hospital.

That appeals to liberal moral interest and a bit of schradenfreude.  A more useful angle of attack is to look at what that 29 year old and 64 year old can buy after the subsidy in Alaska (zip code 99501).  There a 64 year old under 3:1 band would see a Bronze plan cost them $1,300 a month and a Silver plan cost them $1,700 a month after the flat age based subsidy is applied.  These numbers will get even larger once a 5:1 premium band is applied.  This will death spiral the individual market.

Apply the same analysis to Arizona which also has two Republican Senators that count on an older supporting voter base and there are stories to tell which will inflict significant political risk to Republican Senators.

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Reader Interactions

31Comments

  1. 1.

    BGinCHI

    February 24, 2017 at 11:57 am

    So, basically, we’re fucked, but Alaska is more fucked.

  2. 2.

    Baud

    February 24, 2017 at 11:57 am

    That appeals to liberal moral interest and a bit of schradenfreude.

    QFT

  3. 3.

    dr. bloor

    February 24, 2017 at 11:58 am

    So the party in power is actively trying to kill an already-dwindling base that keeps putting them in charge of these things.

    Please don’t ask me to “reach out” to these people, on the off-chance that what they have is contagious.

  4. 4.

    BGinCHI

    February 24, 2017 at 12:02 pm

    @dr. bloor: Before, their racism was masked by their so-called “economic anxiety.”

    Well, now they are going to get some real, palpable economic anxiety, and they ain’t gonna be able to blame it on Obama.

    (ok, maybe they will)

  5. 5.

    burnspbesq

    February 24, 2017 at 12:06 pm

    And if you explain it to them, they either won’t get it or won’t believe it. Until they start wondering why they’re going to so many funerals all of a sudden.

  6. 6.

    Baud

    February 24, 2017 at 12:09 pm

    Jesus Christ. It’s 2017, and they couldn’t even scan the bill in straight.

  7. 7.

    dr. bloor

    February 24, 2017 at 12:09 pm

    @burnspbesq: The revised program will take a page from Logan’s Run and refer to funerals as “Carousel.” Perfectly natural.

  8. 8.

    Baud

    February 24, 2017 at 12:17 pm

    Does this replacement plan continue to prohibit discrimination on the basis of sex? If not, I’d imagine those age subsidies will be of less benefit to women.

  9. 9.

    hovercraft

    February 24, 2017 at 12:30 pm

    @Baud:
    Drunk scanning?

  10. 10.

    TenguPhule

    February 24, 2017 at 12:30 pm

    Apply the same analysis to Arizona which also has two Republican Senators that count on an older supporting voter base and there are stories to tell which will inflict significant political risk to Republican Senators.

    The problem is that the GOP is betting more people who won’t vote for them will die then those who will.

    And that they can blame Democrats for the fallout.

  11. 11.

    p.a.

    February 24, 2017 at 12:46 pm

    Echoing above, some small % of their base might realize what is happening to them and why, but the great majority are so fucking stupid the ‘OCare was collapsing since day 1’ meme will work.

  12. 12.

    DAVID ANDERSON

    February 24, 2017 at 12:49 pm

    @p.a.: 5% base swing turfs a lot of incumbents

  13. 13.

    Kelly

    February 24, 2017 at 12:56 pm

    Don’t know what the the 5 to 1 age banding will do to Oregon premiums but the $4000 (60) + $3500 (56) is close to our subsidy is now. Wonder if states can define minimum benefits?

  14. 14.

    SRW1

    February 24, 2017 at 12:58 pm

    This will death spiral the individual market.

    But it will save on having to constitute and run the Death Panels!

  15. 15.

    DAVID ANDERSON

    February 24, 2017 at 12:59 pm

    @Kelly: increase your premiums by 25% as a low ball estimate for 5:1 instead of 3;1

  16. 16.

    piratedan

    February 24, 2017 at 1:01 pm

    @BGinCHI: in certain cases, it appears that some people will get a brand new condom, others, not so much it seems.

  17. 17.

    Kelly

    February 24, 2017 at 1:02 pm

    @DAVID ANDERSON: Thanks.

  18. 18.

    hitchhiker

    February 24, 2017 at 1:06 pm

    Can anybody explain to me how they think any of this will work without a mandate? If the pool shrinks in such a way that there are a LOT fewer healthy people, doesn’t that automatically mean that the ones in the pool will have to pay more?

    Also, my family has lived through a “medical catastrophe.” We had very good insurance, not a cheap catastrophic coverage, but a solid policy. We were STILL out about $100k in non-covered costs after the first year.

    Democrats should be saying every day that the ACA makes it illegal for insurance companies to sell you crap in the same way that laws make it illegal to sell you cars with no brakes. Being allowed to buy a car with no brakes is not freedom, it’s dangerous for you and for everyone else on the road.

    I swear to god, these people.

  19. 19.

    Hoodie

    February 24, 2017 at 1:15 pm

    The problem is that the GOP is betting more people who won’t vote for them will die then those who will.

    Exactly. The base is richer old folks who don’t need and don’t qualify for subsidies and young ones who don’t need much health care and don’t care about their elders. The GOP is adept at fractionation of the electorate. They’ve garnered a massive amount of power by mastering the 51% rule.

  20. 20.

    Kelly

    February 24, 2017 at 1:20 pm

    It kinda looks like they picked the highest income, lowest subsidy and applied those subsidies across the board. Politically savvy higher income are their people. Keeps them in the herd.

  21. 21.

    David Anderson

    February 24, 2017 at 1:24 pm

    @hitchhiker: Define “Work”

    It works as a “plan-like” collection of words that defeats the talking point of “They have no plan” and it reduces the issue to dueling and discredited expertise.

    It does not work if you believe that people should be protected from catastrophic medical expense risk as this is configured to quickly death spiral

  22. 22.

    Kelly

    February 24, 2017 at 1:32 pm

    Republicans could easily convince their voters that price increases from age banding were caused by the Obamacare catastrophe.

  23. 23.

    Stillwater

    February 24, 2017 at 2:13 pm

    So, they’re proposing a plan in which the effective cost of a premium is directly a function of age? WTF? Whoa. It’s a Replacement plan, tho. I’ll give em that.

    Personally, I think this abomination was leaked for a reason: because it’s fucking insane. I don’t have a ton of faith in Republicans to really solve the problems inherent in the ACA, but I give them enough credit to not pass this piece of shit. They’re own voters would go fucking nuts.

  24. 24.

    WereBear

    February 24, 2017 at 2:16 pm

    This has all been taking place in Fantasy World up to now, an imaginary tale the right wing has been selling for decades. And so there hasn’t been any blowback; they can call us names when we predict that this way lies disaster, but thanks to us, they have actually been dodging many of the disasters.

    Worlds just may collide, now.

  25. 25.

    Stillwater

    February 24, 2017 at 2:18 pm

    @hitchhiker: Can anybody explain to me how they think any of this will work without a mandate? If the pool shrinks in such a way that there are a LOT fewer healthy people, doesn’t that automatically mean that the ones in the pool will have to pay more?

    As far as I can tell, it creates an price-based carve-out eliminating the highest-cost segment from getting insurance (so costs go down and premium price stays low). And if those folks CAN get insurance, they’re priced in at their actuarial value anyway.

  26. 26.

    hitchhiker

    February 24, 2017 at 2:47 pm

    @David Anderson: I meant “work” in the sense of, if implemented, this policy will achieve its stated goals.

    I realize that has nothing to do with what’s going on, but it does seem that at some point there will be real life effects for whatever they do, just as there were with the ACA.

  27. 27.

    Bob Hertz

    February 24, 2017 at 5:32 pm

    There are a minority of states where the new age based subsidies might actually work for a year or two.
    California, Indiana, PA.
    In most states the 5-1 ratio will cause total disaster at older ages.

  28. 28.

    DAVID ANDERSON

    February 24, 2017 at 5:42 pm

    @Bob Hertz: urban areas with Medicaid like carriers will do OK up to early 50s but rural areas screwed

  29. 29.

    Fred

    February 24, 2017 at 7:19 pm

    Also note that page 54 of the bill introduces age bands for the Premium Tax Credit subsidy, which up to now has only been based on income. (Of course, this provision is only designed to apply to 2018 and 2019, after which subsidies would be based solely on age.)

    So beginning in 2018, oldsters who do NOT get a subsidy would get hit by age band expansion. Oldsters who DO receive subsidies may not initially care about age band expansion because in the past, any increase in the unsubsidized rate was offset by a corresponding increase in their subsidy. But that’s when many will discover that their subsidies have been decreased by as much as an amount equal to 2% of their annual income (essentially a 2% tax increase).

    Consumers who currently receive subsidies will have to look at the matrix on page 54 to determine what the impact would be in their own situation – some younger people would get an INCREASE in their subsidies equal to more than 5% of their annual income.

    All of this is important to remember even if an entire Repeal & Replace bill fails to pass, in which case the GOP will likely try to pass dozens of technical adjustments such as this one. I have to believe that any standalone change to the age band will also include this introduction of age bands into the subsidy calculation.

  30. 30.

    Buskertype

    February 24, 2017 at 7:29 pm

    [intemperate rhetoric redacted by the author]

Comments are closed.

Trackbacks

  1. A Look At Republican Intentions? Diving Into The Leaked ACA Replacement Bill says:
    February 25, 2017 at 9:45 am

    […] in their HSA. However, most older people, and even younger people in some parts of the country, would have to supplement the tax credits substantially out of their own pockets to afford coverage. Older enrollees could face premiums five […]

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