Older ACA enrollees could see jump in premiums

Feb. 27--Whether the Affordable Care Act is repealed, replaced or repaired, one less well-known provision of the law could become pivotal in coming weeks for older adults not yet eligible for Medicare.

For the past three years, the ACA has blocked insurers from charging older enrollees in the federal marketplace plans more than three times the amount charged young, healthy adults for the same plan. The difference can be hundreds of dollars a month.

A plan proposed by U.S. House Speaker Paul Ryan, R-Wis., would change that ratio to 5-to-1, but that is drawing opposition from AARP -- an organization with 1.8 million members in Pennsylvania and nearly 39 million nationwide -- which says it would hit those in the 50-64 age group particularly hard.

The idea behind adopting the 3-1 ratio in what's called "age-band rating" was to somewhat flatten premium costs across generations.

Under a previous standard, some states allowed insurers to charge up to five times or more for older people. Pennsylvania does not have age-rating restrictions, although insurer rates must be approved by the state insurance commissioner.

The Seattle-based actuarial firm Milliman in January estimated that moving from a 3-1 age-band rating to a 5-1 rating could reduce the monthly premium on a silver plan for a 21-year-old from $348 to $262.

But a 60-year-old would see a $216 increase -- from $943 to $1,159.

David Certner, AARP legislative counsel based in Washington, D.C., said tightening the age-band rating "was our highest priority" when the Affordable Care Act was coming together, adding that at the time "the 50-64 age group was actually the fastest growing group of uninsured in the country."

There were multiple reasons for that trend.

Only two years before President Barack Obama signed the ACA into law in 2010 -- making insurance accessible to 20 million Americans, including 700,000 Pennsylvania residents -- the country had been hit with its biggest recession in generations and people who lost their jobs often also lost their health insurance.

This hit older workers particularly hard, Mr. Certner said, because they couldn't afford the higher premiums charged by insurers based in part on their age -- if a pre-existing medical condition didn't block them from getting health insurance altogether.

Mr. Certner said 256,000 Pennsylvanians ages 50-64 have signed up for an individual plan with the ACA marketplace, about half of them qualifying for federal subsidies to help with their premiums based on their yearly income.

"I think the important point for [insurers] is that they want to get young, healthy people into the insurance pool," he said. "The problem is that the age ratio ends up penalizing people at the other end who can't afford insurance."

The Pittsburgh area's two major insurers were reluctant to directly address the age-band rating issue.

David Holmberg, Highmark's president and CEO, has said previously that the ratio needs to be higher than 3-to-1. Last week, the insurer deferred to a statement from a Blue Cross Blue Shield Association official who said, "Doing more to attract younger, healthier people into the system is critical to balancing out the costs of those who need significant, ongoing medical care. Otherwise, premiums will skyrocket and coverage will become less accessible to everyone."

Diane Holder, president and CEO of UPMC Health Plan, said in a statement that "keeping coverage affordable for people of all ages is critical to a successful marketplace" and that UPMC will continue to work collaboratively with both state and federal officials to achieve that.

The ACA marketplace has proved challenging for insurers. Highmark has been among the harder hit, estimating that it paid $1.20 for care for every $1 it received in premiums in the early years of the federal marketplace.

One major factor in the losses was a shortage of young, healthy enrollees whose premiums would help offset costs incurred by older people more likely to have developed chronic conditions such as diabetes or other medical problems.

"We think changing the age band would be one way to help lower costs for the younger, healthier adults so they feel more encouraged to participate," said Kristine Grow, senior vice president for communications at America's Health Insurance Plans trade association in Washington, D.C.

That, in turn, would help stabilize the market and lead to lower premiums for everyone, she said.

America's Health Insurance Plans had warned just before the 3-1 age rating was implemented in 2014 that it "represents a dramatic and likely destabilizing change in how rates are regulated in state insurance marketplaces."

With marketplace premiums subsequently going up, and some insurers dropping out, they have some evidence to back that up.

Mr. Certner, though, pointed out that those in the 50-64 age group enrolling in individual marketplace plans represent "a population that needs insurance more than others" but may be less able to afford it because many are in lower-paying jobs.

He suggested that additional subsidies or different plan offerings could bring in younger members while not pricing out their older counterparts.

"There are a number of other options that we're happy to consider," he said. "We just don't like this approach where we make people at the high end pay exorbitant rates."

Steve Twedt: stwedt@post-gazette.com or 412-263-1963.

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