Trumpcare would cut premiums for the young by jacking them up for the old

Republicans’ proposed replacement for Obamacare has prompted loud fights between the left and the right, ideologues and technocrats, and Speaker Paul Ryan and Breitbart News. It has also set up a quieter showdown between the young and old over who will foot America’s enormous health care bill.

Under Obamacare, the elderly pay no more than three times what the young pay for health insurance — even if their care is several times more expensive. The policy before Obamacare was known as “age rating,” and over the last several years, young people’s premiums have been inflated to accommodate these price controls.

The new Republican plan, however, would decrease insurance premiums for most young people and increase them for older people, prompting opponents to label it an “age tax.” Under it, health insurers could charge the elderly up to five times more than they charge the young.

“It’s less of an open and shut case than other Obamacare regulations,” said Massachusetts Institute of Technology economist Jonathan Gruber, who was a consultant for the Obama administration’s health care push. “It’s a social judgment of sharing the burden. Do we really want older people to bear the full cost of their care, or do we distribute it?”

Gruber was also one of the architects of the Massachusetts health care reform law signed by then-governor Mitt Romney in 2006. Gruber noted that the state distributed costs even more than Obamacare did, with the elderly paying no more than twice as much as young people.

The Trumpcare bill drew the ire of the politically powerful American Association of Retired Persons (AARP), which called it an “age tax” and asked members of Congress to vote against it. That kind of criticism from the organization could change the political dynamics among Republicans, who rely on the support of older voters.

The AARP, which has 38 million members over the age of 50, claimed that charging the elderly up to five times as much as the young would increase annual premiums by an average of $3,192 for people 60 to 64 and $1,524 for people 50 to 59. Commonwealth Fund, a private foundation focused on health care, recently published a report estimating that the average 64-year-old’s annual premium would go up $2,090 under the same policy, while the average 21-year-old’s annual premium would go down $720. Trumpcare’s tax credits are also not as generous as Obamacare’s for most people, so the premium hikes could affect the elderly even more.

“There are winners and losers in health care reform,” said RAND Corporation’s Christine Eibner, who has written extensively on health care and co-authored the Commonwealth Fund report. “Under [Obamacare], young people spent a little more than they would normally spend and old people a little less.”

Democrats defended this surcharge on youth as a downpayment into a system that will eventually benefit them. “It’s not unlike Medicare or Social Security, you are paying for something that will disproportionately benefit you later on,” said Drew Hammill, a spokesperson for House Minority Leader Nancy Pelosi.

AARP Legislative Counsel David Certner defended the group’s position, saying that “we need to make sure health care is affordable for older Americans who already pay three times more for their insurance.”

But young people who are counted on to help subsidize the elderly have been somewhat resistant to join Obamacare’s individual markets. Adults aged 25 to 34 are twice as likely to be uninsured than adults 45 to 64 and have the highest uninsured rate of any age group, according to a 2015 survey conducted by the CDC’s National Center for Health Statistics.

“That’s been one of the things Democrats and the Obama administration were working on to strengthen [Obamacare],” said Hammill, who lamented that such efforts might be over because the Trump administration “doesn’t want this law to succeed.”

Obamacare taxed anyone who did not purchase health insurance, a process known as the individual mandate. But these so-called “young invincibles” either paid or avoided the loosely enforced mandate. As a result, the insurance pool in most states was less healthy than hoped for and premiums rose.

The new Republican plan does away with a lot of the sticks for young people and instead provides carrots in the form of lower premiums. Still, Democrats are quick to point out that the new bill is not universally good for young people. It includes a 30 percent increase on health insurance if a person does not have continuous care for more than two months. Young people are more likely to switch jobs frequently and would likely be disproportionately affected by this price hike. With lower premiums, however, the young pay a less expensive penalty than the old under Trumpcare.

The Congressional Budget Office finishes its analysis of the law early next week.