James Oliphant’s Sunday L.A. Times article, “Healthcare Reform Bill Wouldn’t End Higher Premiums Based on Age” raises a touchy issue, which may entail significant political costs for Dems in the mid-terms and ’12, if some adjustment is not made. Oliphant, discussing current health care reform proposals, explains it thusly:
…The far-reaching clampdown on insurers leaves one highly controversial element untouched: the issue of charging higher premiums to older policyholders than to younger, presumably healthier consumers who are less likely to file costly claims…Under the provisions of the bill passed by the House on Saturday, as well as in the probable Senate version, insurers will be able to charge middle-aged consumers at least twice as much as they do younger customers.
…Experts use the arcane-sounding term “age rating,” and they discuss it in terms of ratios — as in a 2-1 formula or a 4-1 formula. Behind the jargon, the issue has huge financial and other implications for millions of Americans and the insurance industry.
For example, according to a recent Urban Institute study, if the age-rating ratio were set at 2 to 1, a typical 58-year-old policyholder would pay about $5,900 a year for health insurance. If the age rating were 4 to 1, the premium could jump to $8,650…Conversely, a 24-year-old would pay about $2,965 under a 2-1 rating system, but the premium could fall to $1,880 if the 4-1 ratio were used.
Advocates for older Americans argue that age rating amounts to discrimination, gives insurers a back-door way to deny coverage to those who need it most, and imposes serious hardship on many middle-aged people who are years away from being eligible for Medicare.
“Age is an immutable characteristic. I can’t make myself younger,” said Natale Zimmer, policy director for OWL, an advocacy group for middle-aged and older women. “To charge someone more simply based on age really amounts to discrimination.”
…Meanwhile, depending on the ratings, older people could have both higher costs and higher out-of-pocket expenses because they are more in need of services.
It’s a difficult challenge, determining fairness in health care premiums. Today’s older health care consumers were told when they were young that they paid relatively high premiums so their costs would be less when they got older. Now they are being told they have to pay more because they are older. Can’t blame them for feeling a little scammed.
The political implications are no less problematic. The importance of young voters in Obama’s election, underscored by the effect of their absence at the polls last Tuesday complicates the political trade-off between making younger voters happy vs. pleasing the older demographic, which turns out on election day at higher rates.
Add to this the fact that older voters are more likely to suffer the ravages of last year’s economic meltdown, in which approximately one-third of pension assets disappeared for most workers who had significant pension holdings. Younger workers will have more time to re-accumulate the missing third, while older workers are more likely to get stuck with the loss. This will not make for happy campers in the older-aged demographic, and unless something is done, incumbents will likely pay the price.
Thus far, Democrats have not been culpable in the rip-off of older workers. It’s been mostly a Republican thing. But if health ‘reform’ that increases costs to older voters is enacted, all bets are off. Conversely, Democrats need a much higher profile as champions of pension reform and moderating health care out-of-pocket costs and premiums paid by older consumers. Assuming they will not react politically to a triple-screwing is wishful thinking, bordering on political suicide.