Affordable Care ActHealth Insurance

The effect of age-based health insurance

Years ago, in the 1990s and before, health insurance pricing was based on location, health history, sex and age. Young people paid, on average, 1/5 the amount paid by older people. Women generally paid more than men. Fewer choices were available to people with pre-existing medical conditions. Obamacare changed that in 2010. Since then, everyone in the same location pays the same rate for health insurance. Then we added government-paid subsidies so that nobody pays more than about 15% of their total income on health insurance.

Now the Republicans propose removing the income-based subsidies and going back to age-based pricing and reducing subsidies for lower-income people.  What will be the impact, net of all subsidies and tax credit adjustments?

The first-to-be-released study by a unit of Marsh & McLennan Companies predicts that insurance costs for lower-income people who pay for their own insurance would be $2,000 per year higher for an average 45 year old but more than $7,000 higher for a 62 year old.

For middle income people the impact would be positive: a savings of about $2,600 regardless of age. More detail is included in this Wall Street Journal coverage.

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