1. Capital Hill Briefing January 24, 2011 How the ACA impacts the 50-64

2. John Rother Executive Vice President for Policy & Strategy

3. How the ACA impacts the 50-64 THE PROBLEM TODAY

4. Challenges TODAY for older Adults in the Individual Market Can you get coverage now? In most states, insurers can refuse based on pre-existing conditions Industry’s own 2008 survey found 20% - 29% of 50-64 are REFUSED Where can you get coverage now? State “high-risk pool” often the only option (only 200,000 have enrolled in pools created over last 25 years in 35 states) By state law, risk pool rates generally set at 150% to 200% of standard rates

5. What does the coverage you can get now look like? Premiums: If accepted, premiums vary by health & age – Average premiums for early 60’s often more than four times the rate for early 20’s – Due to premium variations based on applicant’s health, about 1 in 4 offered coverage with even higher-than-average premiums Deductible: Average (from industry data) for single PPO/POS plans approximately $2,500 every year – Near a third of plans had deductibles of $3,000 or more yearly Cost-sharing: Two-thirds of those 50-64 in individual market spend 10% or more of income on premiums plus out-of-pocket costs Challenges TODAY for older Adults in the Individual Market

6. Declining Numbers have Employer Coverage Source: http://www.gallup.com/poll/145277/New-Low-Healthcare-Employer.aspx?version=print

7. Recent Unemployment Rates of the 50-64 Source: U.S. Bureau of Labor Statistics at http://data.bis.gpv:8080/PDQ/outside.jsp?survey=In U.S. Bureau of the Census, Current Population Survey, calculated using DataFerrett for Dec 2007, June 2009, Nov 2010 Unemployment Rate % Out 1 Yr or More Avg Wks Unemployed 21 29 45

8. Impact of Recession on ACCESS to HEALTH CARE INSURANCE Loss of job often means loss of health coverage Part-time workers less likely to get employer coverage 50-64 generally do not qualify for Medicaid, the limited-income program, unless disabled Individual market may be only option Loss of income means affordability of COBRA or individual coverage a challenge – Unless self-employed, non-group premiums are paid from taxable income

9. Impact of Recession on 50-64 PAYMENT for CARE Extent of 50-64 health payment concerns the past year : (Kaiser June 2010) Almost 1 in 5 had problems paying medical bills Over 1 in 10 “used up all or most of their savings,” reported being contacted by a collection agency, and/or reported having difficulty paying other bills due to medical costs Nearly 4 in 10 reported delaying or skipping care due to cost – Included relying on home remedies or over-the-counter drugs instead of seeing M.D., putting off getting needed care, and skipping dental care or checkup More than 1 in 4 were “very worried” about either having to pay more, not being able to afford services, losing insurance, or staying in a job to keep health benefits

10. 1 in 5 Source: Kaiser Survey June 2010 Impact of Recession on 50-64 PAYMENT for CARE

11. 1 in 10 Source: Kaiser Survey June 2010 Over 1 in 10 “used up all or most of their savings,” reported being contacted by a collection agency, and/or reported having difficulty paying other bills due to medical costs Impact of Recession on 50-64 PAYMENT for CARE

12. Impact of Recession on 50-64 ACCESS to CARE 4 in 10 Source: Kaiser Survey June 2010 Included relying on home remedies or over-the-counter drugs instead of seeing M.D., putting off getting needed care, and skipping dental care or checkup

13. 1 in 4 Source: Kaiser Survey June 2010 Impact of Recession on 50-64 ACCESS to CARE More than 1 in 4 were “very worried” about either having to pay more, not being able to afford services, losing insurance, or staying in a job to keep health benefits

14. How the ACA impacts the 50-64 Help under the ACA

15. How ACA changes Accessibility and Affordability for 50-64 Better Access and Cost – No coverage denial for pre-existing conditions (2014) – Lower ratio for premiums based on age 3:1 (2014) – 35%-50% tax credits to small employers (under $50,00 payroll) for providing Health Insurance and paying 50% or more of cost of coverage (2010)

16. Better Access and Cost – Immediate (2010) availability of state High Risk Pools for the uninsured; 27 states have set up state-based programs (with more reasonable premiums) and 23 states have deferred to the federal government for new programs – Provides increased ability to find and afford insurance until state Exchanges operate in 2014 How ACA changes Accessibility and Affordability for 50-64

17. Better Coverage – ACA bans caps on lifetime coverage (2010) – Bans dropping coverage when seriously sick (2010) – Insurers must show share of premiums spent on claims and quality improvements, the Medical Loss Ratio (MLR) = at least 80% indiv/sm group plans; 85% large group plans beginning in 2011 – Bans caps on annual coverage (2014) – Individual buyers can purchase through their “Exchange” with subsidies based on income (2014)

18. Help for Early Retirees – $5 billion re-insurance fund for employers covering retirees ages 55-64 – Fund encourages former employers to maintain retiree health care coverage How ACA changes Accessibility and Affordability for 50-64

19. State Implementation building toward 2014 – Setting up exchanges – Synchronizing eligibility between Medicaid and state Exchanges – Rate increase reviews – Medicaid expansion plans – Pre-existing Condition Insurance Plans (PCIP) in 27 states

20. How the ACA impacts the 50-64 OVERALL REDUCTION IN RISE OF HEALTH CARE COSTS NEXT 10 YEARS HELPS ALL OF US

21. Potential half a $ trillion a year SAVED as USA “bends the curve” of Health Care spending NHE in trillions Total National Health Expenditures, 2009–2020, Current Projection and Alternative Scenario Potential Savings We are here  CBO estimated savings achieved by the ACA achieved by the ACA

22. How the ACA impacts the 50-64 John Rother Executive Vice President for Policy & Strategy jrother@AARP.org www.AARP.org