The effect of age-based health insurance

Posted on Posted in Affordable Care Act, 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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