National Committee President Max Richtman has rightly called the GOP Obamacare replacement “a triple whammy for seniors” because of its impacts on the private insurance market, Medicare, and Medicaid. Yesterday’s report from the Congressional Budget Office confirms this grim assessment. Of the 24 million Americans who will lose health coverage over the next decade, many will be seniors and “near-seniors” aged 50-64 who can least afford to go without much needed medical care.
PRIVATE HEALTH INSURANCE
On the private health insurance front, the CBO projects that premiums will rise by more than 20% for older Americans. This is mainly because the bill allows insurers to charge older customers up to 5 times more than younger ones. At the same time, the GOP legislation yanks the financial rug from underneath older enrollees by replacing generous Obamacare subsidies with meager tax credits. According to today’s New York Times:
“The CBO estimates that the [net] price an average 64-year-old earning $26,500 would need to pay… would increase to $14,600 under the Republican plan.” – New York Times, 3/14/17
The Times reports that older American’s out-of-pocket insurance costs would also rise:
“The hypothetical older customer who could pony up $14,600 for insurance under the GOP plan would also pay substantially more out of pocket for any health care services. And changes to the requirements for health plans mean that, across the board, deductibles and cost-sharing will increase.” – New York Times, 3/14/17
The reason for the word “hypothetical” is that most older Americans would not be able to afford $14,000 in premiums, let alone rising deductibles and co-pays. Unable to pay these exorbitant prices, millions of “near seniors” (aged 50-64) will simply have to drop their health insurance during those crucial years before they are eligible for Medicare and need it most.
The GOP phase-out of Obamacare’s Medicaid expansion will also hit near seniors in the lower income brackets particularly hard. As a result of these changes, the CBO finds that people between 50 and 64 years old earning less than 200% of the federal poverty level would make up a larger share of the uninsured, from just over 10% under Obamacare to nearly 30% under the Republican replacement. To re-iterate: 30% of near seniors earning a modest income will lose healthcare coverage from Medicaid. That’s nearly one third of the lower income seniors who benefited from the Obamacare Medicaid expansion.
The GOP bill also radically restructures Medicaid by ending guaranteed federal matching funds to the states and effectively cutting $880 billion from the program over ten years. Cash-strapped states will be compelled to compensate for this shortfall by cutting benefits and eligibility for Medicaid. The CBO estimates that 14 million people will be forced off of Medicaid rolls by 2026. This is particularly bad news for seniors who rely on Medicaid to pay for long term care services and supports when their personal savings are depleted. Those seniors will either have to rely on their financially-squeezed families to pay for long term care, or be forced to forgo the care they need.
According to the CBO report, the Republican health plan achieves most of its budget savings by rescinding taxes on higher-income Americans. Unfortunately for current and future retirees, those tax revenues were helping to keep the Medicare program on a sound financial footing. By repealing a $117 billion tax on income above $200,000 a year, the GOP bill reduces the solvency of Medicare by 3 years.
In a perversely self-fulfilling prophecy, the very budget hawks who insist that Medicare needs to be “reformed” because of its solvency problems are now making the program even less financially sound. This opens the door for the “reformers” to argue even more vehemently for privatizing Medicare and turning it into a voucher program, which will hurt seniors with low or modest incomes.
REVERSE ROBIN HOOD
In reviewing the CBO analysis, a theme quickly emerges. The Republican plan rips benefits away from lower income and older Americans while rewarding upper income earners with billions of dollars in tax breaks. It achieves federal budget savings on the backs of the people who can least afford to sacrifice. The young, healthy and wealthy do better under the GOP plan. With the triple assault on Obamacare, Medicaid, and Medicare, seniors and near seniors are left in the cold. As National Committee president Max Richtman likes to say, the Republicans’ message to older Americans seems to be, “You are going to be on your own and good luck… and I’m not even sure about the ‘good luck’ part.”