Where's the Best Place to Live Under the American Health Care Act?
New data shows just how arbitrary premium increases might be for Americans if the GOP plan becomes law.
If you live in Cleveland County, North Carolina, make less than $40,000, and buy your own health insurance, it might be a good time to start saving.
According to a new interactive from the Kaiser Family Foundation, under the Republican plan to repeal and replace Obamacare, the average monthly premium for 40-year-olds making $30,000 in your county will double from $2,480 per year to $5,060 per year by 2020. The change is less dramatic if you happen to be younger, but if you’re closing in on 60 years old, expect an annual increase of about $16,000 dollars total in what you pay for health care.
Instead of raiding your retirement fund, though, you might be able to make out pretty well by just packing up, hopping in the car, and moving a couple miles south to Spartanburg County, South Carolina. There, premiums for 40-year-olds making around $30,000 are expected to diminish from $4,080 to $2,190 under the American Health Care Act. Your premiums will still skyrocket as you approach old age, but not as much as they would have in Cleveland County. If the capriciousness of the health law to which your hypothetical life is now subject hasn’t quite hit you, it might by the time you pay somewhere between a third and half of your overall pre-tax income on health insurance on your 64th birthday—and then almost nothing the next year as you turn 65 and finally reach Medicare.
Hypotheticals can be of limited use in the constantly shifting and often counterintuitive landscape of health policy. But models like Kaiser’s highlight just how dramatically different health-care costs for people could be from one county to the next and one year to the next under the AHCA. The new House bill—which has been derided by the right as a somewhat more conservative version of the Affordable Care Act and by moderates and liberals as an untenable erosion of coverage—takes an axe to Obamacare’s premium tax credits for purchasing insurance on the exchanges. It replaces those credits—adjusted for age, insurance-market prices, and income—with a new tax credit that is only adjusted by age. That adjustment is more than offset by new rules allowing insurers to charge five times as much for elderly people as they do for younger people.
The result is a system that almost invariably inverts the priorities of Obamacare. The main goal of Obamacare’s premium tax credits was to limit the percentage of household income that people spend on insurance, meaning it was more generous to people with less money, more generous to older people with more expensive health care, and more generous to people living in places where health insurance is more expensive. The AHCA, however, provides a credit that is much less responsive to income and is not tied to the actual regional expense of health care. And it allows insurers to charge more for older people, meaning it actually increases the share of household income spent on insurance for the most vulnerable groups of people in private insurance: the poor, the elderly, those living in expensive or underserved health markets, and those who happen to be some combination of the three. See the maps below:
According to Kaiser, many low-income people would see the share of their income spent on health insurance grow from roughly 5 percent to 10 percent under Obamacare to over 20 percent under the AHCA in particularly expensive markets. In places like North Carolina, Tennessee, Nebraska, Arizona, and several other swathes of rural America, those shares are highest. But the real disparities in affordability come into view when people making $100,000 are taken into account:
According to the projections, under the AHCA people making $100,000 or more across the country will almost all spend roughly the same—or less—on health insurance as a share of their household income. Whether by design or the result of unforeseen interactions, it’s clear that the AHCA reckons with the problem of rising premiums on the exchanges—the same problem that most Republicans highlighted in anti-Obamacare campaigns—by lowering them for upper-middle-class and wealthy people at the expense of everyone else.
The funhouse-mirror effect of the policy becomes even more clear when age is taken into account. Consider the premium increases for 60-year-old people making $30,000 a year:
Unless they all move to New York, low-income 60-year-olds would regularly see increases of 75 percent or more in their premiums. That’s an incredible figure, especially given that the age-adjustability of the tax credits in the bill was supposed to help offset higher health costs among the elderly. These increases have been a key point of contention for both Democratic and Republican opponents of the bill. To placate them, House Speaker Paul Ryan promised a “reserve fund” for older, near-Medicare-age enrollees of between $75 billion and $85 billion that would finance additional tax credits for this particular group of Americans. That fund, however, hasn’t actually been created, depends on the Senate creating it from a tax break, and still might not be enough to make health insurance affordable for this group.
The AHCA looks poised to put health insurance out of reach for not only those older Americans, but other vulnerable populations, including people with low incomes and people living in places disconnected from health infrastructure. In turn, those people could simply become more uninsured and sicker, and the places they live more expensive. On the bright side, the law may work pretty well for healthy people, those who can already afford their health insurance, and—in extremes—those who can travel for lower rates.