Older working class Americans would get hit hard under the Republicans' proposal to repeal and replace Obamacare.
The Congressional Budget Office analysis, released Monday, found that a 64-year-old could see his premium on the individual market climb by as much as 25% under the GOP's America's Health Care Act. That's largely because insurers would be able to charge older enrollees more compared to what Obamacare allows.
Older folks with lower incomes would really feel the difference since the refundable tax credits provided under the GOP bill are not as generous for this group as Obamacare subsidies.
Here's how their premiums would change: A 64-year-old making $26,500 would pay $1,700 for coverage in 2026 under Obamacare, thanks to its subsidies. But under the GOP plan, his annual premium would be $14,600 since its tax credit would not offset as much of the cost.
Overall, the CBO report found that the legislation's impact on premiums would vary widely based on age and income.
After an initial spike in 2018 and 2019, the nonpartisan agency estimates that average premiums would start falling. By 2026, they would be roughly 10% lower than they are under the current system.
But the averages are misleading. The Republican plan would lower costs for the young, while raising them for older Americans. (Those age 65 and older are eligible for Medicare and are not affected.)
By 2026, the agency estimates that premiums for a 21-year-old would be 20% to 25% lower and a 40-year-old would see a decrease of 8% to 10%. Only older consumers would see a hike.
CBO highlighted two main reasons for this.
First, under Obamacare insurers can charge older enrollees only three times more than younger policyholders. The GOP bill would widen that band to five-to-one, which would hike premiums for those in their 50s and early 60s, but reduce them for younger folks. CBO expects that this provision would not go into effect until 2019 because there wouldn't be enough time to set premiums for 2018.
The AARP is critical of the GOP's plan to loosen the age-band limits, noting that it would put the cost of health care far out of reach for many older Americans. "Putting the financial burden on older Americans is not the way to solve the problems in our health care system," said AARP executive vice president Nancy LeaMond in a statement Monday.
Second, the GOP bill would alter who gets federal help to afford coverage, Obamacare offers subsidies that take into account a person's income and cost of coverage in their area. This is particularly important for older Americans since they typically pay higher premiums.
The GOP's refundable tax credits wouldn't factor in cost, however. Instead the credits would range from $2,000 to $4,000 based on a person's age and they would be capped at a certain income.
As a result, fewer older folks will enroll in the individual exchanges, the CBO predicts.
Of the 24 million people expected to lose coverage by 2026 under the GOP bill, a disproportionate share would be those between the ages of 50 and 64 with incomes below roughly $30,300 for an individual.
Not all older Americans would suffer under the GOP legislation, however.
Those who earn too much to receive Obamacare subsidies would be better off. A 64-year-old earning $68,200 in 2026 would face an annual premium of $14,600 under the GOP bill, compared to $15,300 under Obamacare.