By Daniel Weintraub
The biggest winners from the federal health reform known as the Affordable Care Act will probably be older adults who are too young to be eligible for Medicare.
Today people between age 50 and 64 who don’t get insurance through work face a number of hurdles in finding affordable coverage.
If they’ve been sick, even with a minor ailment, they will probably be denied coverage due to what insurance companies call a “pre-existing condition.”
But even if they are healthy, older adults usually find themselves paying far more than younger people do, sometimes up to five times more for the same benefits.
All of that is about to change.
The Affordable Care Act requires insurance companies to take all applicants, no matter what their health condition. So older people who have been ill can no longer be denied coverage.
Seniors who have been sick also can’t be charged more than people who are healthy.
And while older people can be charged more based on their age, they can’t be charged more than three times what a younger person pays.
Annual and lifetime caps on benefits, which once ended benefits for people with expensive illnesses like cancer just when they needed help the most, have been eliminated.
These changes are part of the law’s attempt to make health insurance, and health care, accessible to all, and to spread the cost of that care to everyone.
But the price of a policy for older people in the state’s new online health insurance marketplace, known as Covered California, won’t necessarily be less than the quoted price for a policy today.
Yet that fact underscores another one of the important changes Californians of all ages will soon see: the ability to comparison shop among policies that offer the same benefits, deductibles and co-pays while competing on the cost of their monthly premiums, the breadth of their provider networks and the quality of their customer service.
For example, a 50-something couple living in Santa Ana with an income of $65,000 a year will be able to get a policy covering 70 percent of their costs for about $900 a month. That’s not cheap, especially compared to a similar policy advertised online today for $574.
But the devil is in the details.
First of all, if the couple’s income were lower, say $40,000 a year, they would be eligible for tax credits that would reduce their monthly premiums.
But more importantly, the plan advertised today, in this case from Anthem Blue Cross, probably would not be available to someone who has a pre-existing condition. Finding a plan that would take someone who has a health history might be impossible, and it would certainly be more expensive. But insurance companies don’t advertise those plans and generally don’t reveal what the rate would be until after the consumer completes a detailed health survey.
More differences between a typical policy advertised today and one that will be sold through Covered California: The current plan comes with a deductible of $5,000 per person, meaning consumers have to pay that much before the insurance company starts picking up 75 percent of the cost of their care. The new plan described here has a much lower deductible, only $2,000 per person.
The current plan claims caps out-of-pocket costs $9,500 per person, not including the monthly premiums. The new plan will cap those costs at $6,370.
The bottom line: if you have a spotless health record, even if you are older, you might be able to find a policy today that has a lower monthly premium than you will get through Covered California. But if you need to use that policy at some point during the year, and especially if you have a moderately expensive health problem requiring tests or a hospitalization, you would probably be better off with the new policy, even at a higher monthly rate.
One potential benefit of these changes is that they will make it easier for older people to leave the workforce to retire early, work part-time, become a consultant or start their own business. Doing any of those things today can be extremely risky, because walking away from a job with health benefits leaves a person vulnerable to huge financial consequences if they get sick.
The law also includes some lesser but still significant changes to Medicare, the insurance program for people age 65 and up and for the disabled.
The biggest is the phasing out of a policy that forced seniors to pay 100 percent of the cost of prescription drugs after they claimed a certain level of benefits. This “doughtnut hole” in Medicare’s drug reimbursement plan was meant to encourage Medicare recipients to use generic drugs, but it was unpopular from the start and will be gone by 2020.
Another change: the law cuts payments to private Medicare Advantage plans that are now used by more than a quarter of Medicare enrollees. That could limit choice and service, but the law also offers financial bonuses to plans that get rated as offering superior care and service, so no one really knows yet how the change will play out.
The flip-side of all these benefits for older people is that some younger people will pay more, especially if they don’t get coverage through their job but still earn too much to qualify for the tax credits that will subsidize insurance for low-income people.
The rationale behind the policy switch is that nearly everyone will one day be sick or old, or both. And when they are, they won’t be tied to a job they don’t want or need, and they won’t have to fear facing medical bills that could wipe out their savings and leave them deep in debt.
Daniel Weintraub has covered California public policy for 25 years. He is editor of the California Health Report at www.calhealthreport.org . Reach him at firstname.lastname@example.org