The House Republican bill to replace the federal Affordable Care Act could result in affordability problems for low-income people nearing retirement age in rural Minnesota.
That's one finding from a study released Wednesday by the California-based Kaiser Family Foundation that projects what 60-year-olds making $30,000 per year would be paying for coverage in 2020 under the GOP plan.
In more than two dozen counties in southern Minnesota, those consumers would be spending more than half their income on health insurance, according to the report, which notes that 60-year-olds in general do better in terms of premium prices and tax credits under the Affordable Care Act (ACA).
There's a flip side, since younger Minnesotans with higher incomes in 2020 would pay a smaller share of income on premiums under the Republican proposal, said Cynthia Cox, a researcher with the foundation. But the dollar impact for younger people is much smaller.
"Affordability really suffers for older, lower-income people," Cox said. "Affordability might marginally increase for higher-income, younger people, but it's certainly not of the same magnitude."
The projections apply to the individual health insurance market where about 190,000 people in Minnesota currently buy coverage — primarily the self-employed and those who don't get insurance from their employer. It's a market that's undergone sweeping change under the ACA, including financial losses that have prompted health insurers to either boost premiums or leave the market.
The Kaiser Family Foundation released its study on the eve of an expected vote Thursday in the House on the American Health Care Act, the long-promised bill from Republicans to repeal and replace the ACA.
An earlier Kaiser study also highlighted the potential impact on lower-income, older people who buy individual market coverage. While the previous report focused solely on the size of tax credits under the Republican bill vs. the ACA, the new report also factors projected premiums for 2020 from the Congressional Budget Office (CBO).
Since the Republican bill was introduced earlier this month, advocacy groups including AARP have focused attention on the potential impact for older people by highlighting the change in "age rating" with the GOP plan.
Insurers under the ACA can charge a 64-year-old no more than three times the premium charged to a 21-year-old. The Republican bill would increase the ratio to 5-1 — effectively lowering premiums for younger people, while increasing rates for those nearing retirement.
Earlier this week, Republicans responded to the concern with amendments to the House bill that free up funds so the Senate would be able to expand tax credits for older consumers. The new analysis didn't factor this change, however, because it's not clear exactly how the money would be distributed, Cox said.
"I think their analysis holds up," said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for Minnesota's nonprofit health insurers. "If you're older, you're poorer, you live in a place where care is expensive — you're going to have real problems paying the premiums, because there's going to be less federal help."
Minnesota health care groups came out last week saying they either couldn't support the Republican plan, or opposed it outright. Beyond changing tax credits in the individual market, the bill would force major changes to the state-federal Medicaid program that could saddle doctors and hospitals with increased uncompensated care costs.
Some conservative groups like the Golden Valley-based Center of the American Experiment have supported the bill. Peter Nelson, a vice president with the group, noted that individual markets in many states had a 5-1 age rating before the ACA.
"This is sort of correcting a problem with the Affordable Care Act, because it was charging younger people too much," Nelson said. "That led to a lot of younger people maybe not joining the market — we had a lot fewer younger people in the market than had been projected."
But many in the pre-retirement age group say that even with the current system they're suffering under sky-high rates. Premiums are particularly high in southeastern Minnesota.
The Kaiser analysis shows that, under the health law, a 60-year-old with $30,000 worth of income during 2020 would face a premium in Rochester of $16,670. That consumer would be eligible for large ACA tax credits leaving a net premium cost of $2,480.
Under the Republican bill, that same Rochester consumer in 2020 would be charted a premium of $22,390, according to Kaiser.
The consumer would receive much smaller tax credits under the GOP plan, resulting in a net premium cost of $18,390 — nearly $16,000 higher than under the ACA, and more than half the consumer's annual income.
Premiums are most competitive in the Twin Cities, where a 27-year-old with $75,000 worth of income in 2020 wouldn't get a tax credit under the ACA, and would pay a premium of $4,240 for the year. Under the Republican proposal, the 27-year-old at that income level would face a slightly lower premium at $3,910 while receiving a tax credit of $2,000.
Bottom line: The consumer saves $2,330 under the GOP plan.
Nelson said he expected Republicans will make changes to the bill to address affordability problems for older people with lower-incomes. He said he supports the current bill, nonetheless, in part because the current individual market is so unstable.
"The status quo is not working," Nelson said.
Christopher Snowbeck • 612-673-4744
Twitter: @chrissnowbeck
