PRINTER FRIENDLY
 

The real goal of health care reform is to provide every American with access to high quality, medically necessary, health and medical services.  To achieve this goal, Congress is working to make the new health program affordable for the federal government. But, most important, for health care reform to work it must be affordable for all health care consumers, including those over 50.

Affordable Premiums

Health insurers will no longer be able to deny coverage to people based on pre-existing conditions or to charge them more based on health care conditions, health care usage, or gender.  These system reforms will allow more Americans to purchase the health insurance they need.

Insurance companies will, however, be allowed to charge higher premiums based on age (age rating). Unfortunately, age rating may be a proxy for pricing insurance premiums based on health status, especially on chronic conditions.  The House of Representatives Tri-Committee draft bill allows insurance companies to charge older people twice as much as younger people. The Senate Finance Committee is contemplating letting insurance companies charge up to five times as much based on age.  In other words, under the Senate proposal, the health plan that costs someone in his/her twenties $100/month or $1,200/year could cost someone in his/her fifties/sixties $500/month or $6,000/year.

Both the House and the Senate are considering "affordability credits" or subsidies to help people with limited incomes pay for the cost of insurance – and hence improve their ability to access medical care. In order to reduce the cost of its health bill, however, the Senate Finance Committee is contemplating limiting subsidies to people with incomes up to 300% of the federal poverty level, or about $32,490 for a single person.  That's not a lot of money for people who live in high cost areas like Washington, D.C., New York, Miami, and Los Angeles.

People over age 50 may feel the greatest impact from the combination of age-rated premiums and a lower premium subsidy level.  For example, someone over 50 who earns $35,000 a year, and who is asked to purchase health insurance costing $6,000 a year will be paying about 17% of her income for premiums alone.  If this person is allowed to ask for a hardship waiver to be excused from purchasing health insurance, she will remain uninsured.

Affordable Cost-Sharing

In addition to having affordable premiums, the health insurance packages need to have affordable cost-sharing.  The New York Times reported in a story on June 30, 2009, that "… an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured."[1] 

High cost-sharing has non-financial consequences, as well.  People who are asked to pay a lot out of their own pockets for their health care do not get medically necessary care.  The Commonwealth Fund estimates that, in 2007, approximately 25 million people under age 65 were underinsured. More than half of this group did not go to a doctor when sick or pursue follow-up treatment that was ordered. [2]  Medicare beneficiaries who reach the coverage gap in their Medicare prescription drug coverage stop filling prescriptions.[3]

It is unclear whether the proposals under consideration will completely remedy the problem of underinsurance; that is, the lack of affordability of cost-sharing. Rather than define benefit packages per se, both Houses of Congress are considering setting actuarial values for the benefits that must be offered.  This means that health insurance plans would have to pay for a specified portion of the cost of care, and the consumer would pay for the rest as a co-payment or co-insurance.  The levels at which the actuarial values of health plans are set is key.  Someone who is required to pay 25% for the cost of a doctor's visit might be able to afford that amount, but 25% of an expensive surgical procedure or of a biological drug that costs thousands of dollars may very well be unaffordable. 

Even if the total benefit package has to meet a certain actuarial level, health insurance plans might still charge very low cost-sharing for routine items and very high cost sharing for more costly services.  Medicare Advantage plans have used this practice as a way to discourage people with chronic conditions from enrolling in the health plan. They charge very little for doctor's visits, but then impose very high out-of-pocket costs for more expensive items like hospital stays, nursing home stays, and wheelchairs.

Conclusion

Affordability is the hidden issue in health care reform, particularly for people over age 50 who tend to use more health care than younger Americans.  If premiums are too high some people will remain uninsured.  And having health insurance won't improve people's lives if they still can't afford to go to the doctor or to fill a prescription.