Guest opinion: Will older Coloradans be winners or losers?
March 17, 2017
The older you get the more you need health care. That's why 77 percent of Americans consider Medicare to be the most important government program after Social Security.
But what about older Americans who are too young for Medicare? Americans aged 55 to 64 are high-end health-care users. They account for the highest per-capita (non-Medicare) health-care spending in the country. They also have much higher out-of-pocket healthcare costs than younger age groups.
In 2013, 17 percent of these people had public health insurance coverage (Medicaid, VA, etc.) and well over 13 percent were uninsured. According to the Government Accounting Office in 2015, 14 percent of this age group lives in poverty and 41 percent have no meaningful retirement savings.
Given all that, you might think that the new health-care reform bill in Congress would focus on improving the situation for these older Americans. Unfortunately, it doesn't.
As the new bill stood on March 16, the plan caps insurance premium support at $4,000 for older Americans regardless of income or how much health care and insurance cost where they live. West Slope insurance premiums and health-care costs have historically been among the highest in the state. Yet West Slope residents would get the same level of support as people on the Front Range, where costs are lower.
According to the Kaiser Family Foundation, if you live here in Garfield County, are 60 years old and earn between $20,000 and $50,000 a year, the ACA subsidy tax credit you currently receive would decrease by 56 percent to 70 percent under this new bill. That means you could end up paying and extra $5,600 to $9,300 per year. And the less your annual income, the more you'll have to pay.
Today, insurance companies can charge older Americans three times more in premiums than younger ones. Under the new plan, that could increase to 5:1, a jump of 67 percent. And if you let your coverage lapse for more than 63 days, should you lose your job or run into financial problems, you would be subject to a new penalty that would increase your premiums by 30 percent. Since older people already pay higher premiums, that penalty would be significant.
If you're on Medicaid, the new health-care bill would eliminate funding in 2020 for the Medicaid expansion that has covered an extra 400,000 Coloradans. In three years, federal funding for Medicaid would be subject to a "per-capita" block grant. Under this policy, which caps the amount of money that can be spent on each Medicaid enrollee, Colorado could lose 25 percent of its Medicaid funding by 2026. Federal regulations on how that money should be spent by the state would be reduced or eliminated.
The idea is that with fewer regulations, states will operate more efficiently and will be able to do "more with less." But few people think that would make up for the funding cuts. Unlike other states that can raise additional revenue to cover the shortfall, Colorado is limited by the TABOR amendment, which requires voter approval for revenue increases. Without that ability, state policy makers would decide whether education, infrastructure or health care would be assigned a greater percentage of a shrinking budget.
Under the new plan, Medicaid expansion would be replaced by so-called "high-risk pools" like the old Cover Colorado program. The funding for those high-risk pools would be a fraction of that currently provided for Medicaid expansion and would cover far fewer Coloradans.
Now, you might think that things would get better after you turn 65. But they probably won't. The House budget proposal that Speaker Ryan will attempt to pass this year would set in motion fundamental changes to Medicare. Beginning in 2020, the eligibility age would begin a transition from 65 to 67.
More importantly, Medicare itself would be transitioned into a "premium support" program. Under premium support, seniors will be provided with a federal support payment that can be used for traditional Medicare or a private insurance substitute. Private insurance companies would try to attract younger, healthier and less-expensive seniors through lower premiums and additional benefits.
That can leave older, poorer and less healthy seniors in the traditional Medicare risk pool. That older and sicker population would become ever more expensive with probably less money in the pool to cover the cost. Medicare would become financially more unstable and cost ineffective over time — just when a lot of baby boomers will need it the most.
By the way, Medicare doesn't pay for long-term care. The only safety net for long-term care, should you run out of money, is Medicaid. According to Genworth Financial, the average annual cost for private-pay assisted living in Colorado is $48,750, and nursing home care has a median annual cost range of $83,000-$97,000. At that rate, it might not take too long to run out of money. Did I mention that the new health-care bill would significantly cut Medicaid?
Robert Semro is a former health policy analyst for the Bell Policy Center, legislative and senior advocate.