By guest writer Bob Jackson
A bill has been introduced in the US congress to change the law and allow health insurance companies to charge older people premiums that are five times more than they charge younger people, instead of the current limit of three times as much.
Make no mistake, this is an “age tax” that severely penalizes people between ages 50 and 64 while providing a very small benefit for younger people.
An individual’s insurance premium is determined by how much risk is associated with that person. It is because younger people pose less risk than older people that their premiums are lower. The current three-to-one age rating spreads total risk across all of us in a way that is fair to everyone. Five-to-one isn’t fair.
Here’s why: Going to a five-to-one age rating will increase premiums for 50- to 64-year-olds by between $1,500 and $3,200 per year. For the oldest among that group, that would mean an annual premium of more than $19,000.
On the other hand, the current three-to-one age rating raises the premium for a 20- to 29-year-old by less than $700, with an annual premium of $4,700.
The three-to-one rating spreads risk across all ages in a way that costs younger folks a relatively small amount while saving older people a considerable amount.
Premiums aren’t the only healthcare cost either; older people already spend much more for out-of-pocket costs like deductibles and cost sharing. In the long run, younger people are set to benefit from the three-to-one system and, if it stays, they’ll be glad for its fair sharing of risk and cost.
If the five-to-one age rating becomes law, 4.8 million 50- to 64-year-old Texas voters will feel the sting of the “age tax” as many will struggle to pay for the healthcare they need at the time they need it most. That means they might forego adequate coverage, making them less healthy at age 65 when they qualify for Medicare, a personal tragedy and a senseless cost increase of $6.4 billion to care for our older citizens.
Members of congress need to stop talking out of both sides of their mouth and work to reduce healthcare costs for everyone. Don’t take money from Americans to increase insurance-company profits. Instead, save citizens and Medicare money by allowing the program to negotiate lower drug prices instead of taking all our money to ensure outrageous profits for big drug companies.
Congress could also allow the safe importation of prescription drugs, so Americans don’t have to pay the highest Rx prices in the world.
There are 2.3 million AARP members in Texas. AARP and its members work with elected officials of both parties to find responsible solutions for rising healthcare costs. If you agree with us, please contact your members of congress – senators John Cornyn and Ted Cruz and house representative Randy Weber – and ask them to stand up for healthcare fairness, not for insurance companies.
Bob Jackson is the director of AARP Texas, a nonpartisan, nonprofit organization representing people age 50 and older throughout the state.