North Carolina is a high cost state for health insurance. Under the Affordable Care Act, people who receive subsidies on Healthcare.gov are shielded from price increases because the subsidy is tied to the cost of the second least expensive Silver plan on Exchange and the individual pays a fixed amount dependent on their income. The personal contribution amount is fixed based on the person’s income defined by the Federal Poverty Level. That means a 21 year old who is subsidized will pay the same post-subsidy premium to the insurer as a 64 year old with the same income.
The American Health Care Act (AHCA) bill that was released on Monday night changes the subsidy formula. Subsidies are no longer tied to the cost of insurance or the individual’s income. Instead any qualified individual who makes less than $75,000 per year receives a fixed subsidy amount determined by age. A 21 year old receives a $2,000 subsidy. A 64 year old receives a $4,000 subsidy. In the ACA premiums are allowed to be three times higher for a 64 year old compared to a 21 year old. In the proposed AHCA, premiums are allowed to be five times as high for a 64 year old than for a 21 year old.
Since the subsidy grows far slower than the premium, this means the 64 year old, for a given deductible, will pay far more for their coverage. I’ve used the 2017 Exchange data to see how much a 60 year old in each county in North Carolina would have to pay after their subsidy every month to buy the least expensive Bronze plan currently offered. Bronze plans tend to have deductibles of at least $6,500 with out of pocket maximums of $7,150. The circles are larger for counties with more enrollment as of 1/31/17.
60 year old residents in Nash County are the best off. They would only pay $439 per month after the newly revised subsidy is applied. Currently, someone earning $20,000 a year in Nash County would pay nothing for the least expensive Bronze plan and only $31 a month for a low deductible Silver plan.
60 year old residents in Bladen, Cumberland, Harnett, Hoke, Richmond, Robeson and Scotland counties are the worst off by this change. They would pay $754 for a Bronze plan under the AHCA fixed age based subsidies. Under the ACA, someone earning $20,000 a year would pay the same as a Nash county resident. Someone who is age 60 and earning $40,000 a year would pay $110 a month for a Bronze plan and $283 per month for a Silver plan under the current ACA income and plan cost based subsidies.
High cost states with a large number of older residents will be significantly worse off under fixed age based subsidies.
There is one caveat. I’ve intentionally underestimated the costs for all counties. I used the current 3:1 age band for premiums instead of the 5:1 premiums as that change is unlikely to survive in the Senate under current legislative rules. If 5:1 premiums are used, all figures should increase by approximately 20 to 30%
Data: Enrollment data from Charles Gaba sourced by Kaiser Family Foundation
Pricing data from CMS
Subsidy data from the legislative text