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Age Rating and Obamacare, More Proof Medicare for All was the Answer


THERE’S BEEN no mistaking through my writing that I’m not a fan of the Affordability Care Act, though individual passages are very positive for people. The Act on whole is not, especially when compared to single payer, which will become more and more apparent next year.

Ben Smith of Buzzfeed picks up on one of the issues that is going to start to shake out that proves just how badly ACA ares when compared to single payer.

State and federal officials and the health care industry are currently preparing to implement two specific ObamaCare provisions taking effect on January 1, 2014, acting on this politically perverse principle of shifting resources from your supporters to your opponents. The first is the individual mandate, which aims to force the young, childless, and healthy – “Young Invincibles,” as they are said to think of themselves – to buy heath insurance, even if they think (and even perhaps make a rational, if risky, bet) that they don’t need it.

The second is a lesser-known policy to limit the practices of charging different premiums to different ages, known as age-rating. Many states currently set a limit on this difference, often mandating that an old person shouldn’t pay a premium more than five times a younger person’s, even if she’s expected to use more than five times as much health care. The ObamaCare provision kicking in next January 1 would reduce that ratio to three-to-one, essentially limiting what the elderly pay in part by forcing young people to carry a larger share of the total cost of national health care.

Ben Smith couches this in a provocative headline that states “Obama prepares to screw his base.” Smith posits that to protect the elderly, who didn’t vote for Obama, ACA will shift health care coverage to younger people, those individuals who have supported Barack Obama from the start and set his presidential ambitions on firm ground.

But young people get old too, right? It’s a goes around comes around health care philosophy.

Mahablog cites a very helpful analysis in Forbes from December 2012.

According to AHIP, the average premium paid by a 24 year old in the individual marketplace is $1200 a year. Using AHIP’s numbers, the price of making the cost of heath insurance more equitable for a 60 year old will potentially cost that 24 year old, on average, an extra $45 a month.

While I don’t mean to minimize this increase, as I recognize that every dollar counts when one is young and getting started, it is important to keep the actual price tag in perspective and weigh the equities when considering that those at the older age range have been overcharged for many years.

The reality is that the young have been paying unreasonably low premium rates for for a very long time–it being in the health insurance company’s profit interest to bring in as many young and healthy people as possible in the door by charging artificially low rates. The problem is that they make up for it by charging artificially high rates to the older people the insurance company would rather not have in the first place. What the ACA seeks to do is correct this situation so that 60 year olds are not precluded from gaining health insurance coverage by being priced out of the market.

Note that this problem could have been averted for younger Americans had we lowered the Medicare age to 55 however this was not acceptable to the Congressional GOP.

Smith cites Health Care Blog’s Maggie Mahar, who first brought the subject up last August.

Under reform, more states could decide to ban age rating, or follow Massachusetts’ example, and limit the ratio to 2:1. But, politically, this would be a third-rail decision. If older boomers pay less, younger adults would be charged more, and most are vehemently opposed to being asked to support the Pepsi Generation. As one of my younger readers once commented, “I’m willing to help my mother, but not someone else’s mother.” [Health Care Blog]

Theoretically, it sounds like a prescription for making a lot of conservatives to me (and always has), but this is the reality of ACA versus single payer.

But as we also know, President Obama made back room deals very early with private insurance and big pharma, even as he pretended that the public option was still a possibility.

Now we’re stuck with ACA.

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3 Responses to Age Rating and Obamacare, More Proof Medicare for All was the Answer

  1. StrideHyde February 11, 2013 at 1:32 pm #

    First, please let me make a correction: it’s Maggie Mahar, not Maggie Mahur. She wrote a book called “Money-Driven Medicine,” a book I highly recommend to anyone who is really interested in why we pay so much for health care in the US.

    I am not an enemy of single payer but I think people forget that what it does is change the way the costs are paid, not what we pay, at least not significantly. I don’t like age rating, but it seems to be a middle ground between charging everyone the same rate (unfair to younger, healthier people) and charging according to age (harder on older, less healthy folks). Single payer, assuming Medicare-for-All is the model, would treat everyone the same regardless of age, so perhaps that is unfair to the young and healthy.

    I know that most people who read this blog hate insurance companies. Fair enough, I am not here to defend them. But we pay $2.6 trillion a year for health care and the insurance overhead only accounts for about 7 percent of that pie. You can check this at the Centers for Medicare and Medicaid Services actuary–I’m not making it up. Part of the problem is the fee-for-service system which gives providers incentive to do more services. Part of it is fragmented, poorly coordinated and sometimes redundant or unnecessary care. Medicare is struggling to right this ship now, under the ACA. It seems to me that we need to get that figured out before we dump an addition 130 million people into that system. If they show a track record of doing a better job controlling spiraling costs while delivering better care, then I think we can have a conversation about Medicare for All. The other thing to keep in mind is 85 percent of the population has employer-sponsored care, and according to most surveys, they are happy with it. I think we should be focusing on the 15 percent who have no coverage or sketchy coverage. And we should be focusing on delivering better care. We spend far too much treating illness rather than making people well.

    • StrideHyde February 11, 2013 at 1:34 pm #

      …additional 130 million people… Oy typos!

  2. David Bynon February 23, 2013 at 10:27 am #

    It feels to me like the ACA was designed from the outset to fail and setup both a single payer system and Medicare for all as the only logical solutions to get out of the mess created by the new law. The only sane components of the ACA are those related to Medicare cost controls and benefits.

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