“Age Tax” would be unfair, unaffordable; Older Texans deserve better

A bill has been introduced in 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 age 50 to 64 while providing a very small benefit for younger people.

We’ve heard a lot about what’s going on in Washington, D.C., lately. But here’s something you might not have heard: Congress quietly introduced a bill allowing insurance companies to charge older workers five times more than what other consumers pay for the same health insurance policy.

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 $1,500 to $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, compared to a five-to-one age rating, a 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 health care cost either; older people already spend much more for out-of-pocket costs like deductibles and cost-sharing. In the long run, younger people will benefit as they age and they’ll be glad that risk and cost was shared fairly.

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 health care they need at a time they need it most. That means they are likely to be 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 older citizens.

Members of Congress need to stop talking out of both sides of their mouth and work to reduce health care costs for everyone. Don’t take money from Americans to increase insurance company profits. Instead, save citizens and Medicare money by allowing Medicare to negotiate lower drug prices instead taking all our money to assure 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 health care costs. If you agree with us, contact your members of Congress and ask them to stand up for health care fairness, not insurance companies.