Rising Health Insurance Costs A Worry For Some Aging People And Early Retirees
Yvonne Read is getting ready to “get slammed” by another health premium increase.
Read, 53, pays more than $2,100 a month for a Covered California family health plan that covers her 57-year-old husband and two young adult children. For next year, the Nevada City, Calif., resident says the premium will go up about $200 a month.
She and her family will have to absorb all of that increase, because their income is too high to qualify for federal premium assistance.
“We’re in that middle bracket that doesn’t get any help,” Read said.
“What do you do? My husband is going to need two surgeries next year,” she said, so it wouldn’t make sense to move to a plan with a lower premium and higher out-of-pocket expenses.
The family will have to adjust by giving their son less for his college expenses, taking longer to pay off bills or putting less in savings, she said.
It’s a dilemma faced by many older Americans who don’t yet qualify for Medicare but also may not make the cut for the Affordable Care Act’s subsidies to help pay for insurance for people who don’t get it through work or the government. Their access to health benefits is threatened by rising premiums and deductibles, recent actions by the Trump administration and unceasing political fights over the law.
Don and Debra Clark of Springfield, Mo., are glad to have health insurance. Don, 56, and Debra, 58, say they know the risk of an unexpected illness or medical event grows as they age, so they must have coverage.
Don is retired and Debra works part time a couple of days a week. As a result, along with about 20 million other Americans, they buy health insurance in the individual market — the one significantly altered by Obamacare.
But the Clarks are not happy at all with what they pay for their coverage — $1,400 a month for a plan with a $4,500 deductible.
Nor are they looking forward to the ACA’s fifth open enrollment period, which runs from Wednesday through Dec. 15 in most states. (California’s enrollment window lasts through January.) Many insurers are raising premiums by double digits, in part because of the Trump administration’s decision to stop payments to insurers to cover the discounts they are required to give to some low-income customers to cover out-of-pocket costs.
“This has become a nightmare,” said Don Clark. “We are now spending about 30 percent of our income on health insurance and health care. We did not plan for that.”
Kevin Lucia, a health insurance specialist and research professor at Georgetown University’s Health Policy Institute in Washington, D.C., said many older people are “rightly the most worried and confused right now.”
“Decisions about which health plan is best for them is more complicated for 2018, and many people feel more uncertain about the future of the law itself,” he said.
Even people who can afford to pay higher premiums bristle at the idea. Laurie Dominic, a 57-year-old resident of Santa Monica, thinks it’s unfair that the monthly cost of her Blue Shield plan will spike 27 percent next year, to $928.48. She doesn’t qualify for premium subsidies and purchased the plan in the individual market outside of Covered California. But she says she won’t switch to a cheaper plan because she likes her current doctors and doesn’t want higher copays.
“It seems to be all about what the companies can raise for their stockholders and not what’s legitimately an increase in health care costs,” Dominic said.
The people at the highest risk are couples who are strapped financially yet just miss qualifying for a government subsidy (which comes in the form of an advanced tax credit). That subsidy is available to people earning up to 400 percent of the federal poverty level, or just under $65,000 for a couple.
Premiums vary widely by state. Generally, a couple in their late 50s or early 60s with an annual income of $65,000 would pay from $1,200 to $3,000 a month for health insurance.
Premiums rose an average 22 percent nationwide in 2017 and are forecast to rise between 20 and 30 percent overall for 2018.
In an analysis released this week based on insurers’ rate submissions for 2018, the Kaiser Family Foundation found that individuals and families who don’t qualify for a subsidy but are choosing plans on the federal marketplace face premiums 17 to 35 percent higher next year, depending on the type of plan they choose. (Kaiser Health News is an editorially independent program of the foundation.)
A similar increase would be expected for people who also buy on some state marketplaces or directly from a broker or insurance company.
Substantial premium increases two years in a row could lead fewer people to buy coverage.
“I’m really worried about this,” said Peter Lee, CEO of Covered California, the exchange entity in that state. “We could see a lot fewer people who don’t get subsidies enroll.” He said that California has taken steps to lessen the impact for people who don’t get subsidies but that “consumers are very confused about what is happening and could just opt not to buy.”
There are already signs of that, according to an analysis for this article by the Commonwealth Fund. The percentage of 50- to 64-year-olds who were uninsured ticked up from 8 percent in 2015 to 10 percent in the first half of 2017. In 2013, the figure was 14 percent.
In many ways, the ACA has been a boon to people in this age group because it barred insurers from excluding people with preexisting conditions — which occur more commonly in older people. And the law restricted insurers from charging 55- to 64-year-olds more than three times what it did younger people. Previously, they could be charged five times more.
The law also provided much better access to health insurance for early retirees and the self-employed — reducing so-called “job lock” and offering coverage amid a precipitous decline in employer-sponsored retiree coverage that began in the late 1990s.
Only 1 in 4 companies with 200 or more workers offered any kind of coverage to early (pre-65) retirees in 2017 compared with 66 percent of firms in 1988, reported the Kaiser Family Foundation. And the vast majority of small firms never did offer such coverage.
Overall, before the ACA became law, 1 in 4 55- to 64-year-olds buying coverage on their own either couldn’t get it at all because of a preexisting condition or couldn’t afford it, according to AARP.
“The aging but pre-Medicare population was our major reason to support the ACA then and it still is now,” said David Certner, director of legislative policy at AARP. “This group benefited enormously from the law, and we think society and the economy benefited, too.”
Just how many 55- to 64-years-olds have been liberated from job lock by the ACA has yet to be fully assessed. But recent data show that 18 percent of people ages 55 to 64 who were still working in 2015 got coverage through the ACA marketplaces, up from 11.6 percent in 2013, according to an analysis for this article by the Employee Benefit Research Institute.
But the Clarks said they’ll have to look carefully at options to keep their premiums affordable in 2018.
Said Don Clark, “If we get to a point where we have a $10,000 deductible and pay 40 percent or more of our income for health insurance, I’m not sure what we’ll do. We can’t afford that.”
This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.