I am reading through the leaked Republican Reconciliation bill at Politico.
P.66 has the replacement subsidies that are determined solely by age and do not reflect either income or local cost of coverage:
- 18 to 29 — $2,000 year
- 30-39 — $2,500 year
- 40-49 — $3,000 year (note mid-40s is when the cost curve which is incresing from a 3:1 band to a 5:1 band starts getting expensive)
- 50-59 — $3,500 year
- 60+ — $4,000 year
There are major distributional impacts that will kick the Republican base voters in the teeth. Most notably the increase of the age premium band from 3:1 to 5:1 will make insurance much more expensive for older insured individuals. The subsidy band is only 2:1.
In Pittsburgh under the 3:1 band, a 29 year old can buy a catastrophic policy today for less than their monthly subsidy. A Bronze plan would cost $20 out of pocket every month and a Silver plan $47 per month. Under the same banding, a 64 year old with their $333 non-income adjusted subsidy will be able to buy a catastrophic policy for $89 per month, a Bronze plan for $152 per month and a Silver plan for $211 per month. This is a favorable set of assumptions for the 64 year old as the age banding is 3:1 instead of 5:1. Less favorable assumptions would make the Silver policy cost $600 or more after subsidy for a 64 year old. The only person who will buy that policy is someone who is already getting extremely expensive treatment in the hospital.
That appeals to liberal moral interest and a bit of schradenfreude. A more useful angle of attack is to look at what that 29 year old and 64 year old can buy after the subsidy in Alaska (zip code 99501). There a 64 year old under 3:1 band would see a Bronze plan cost them $1,300 a month and a Silver plan cost them $1,700 a month after the flat age based subsidy is applied. These numbers will get even larger once a 5:1 premium band is applied. This will death spiral the individual market.
Apply the same analysis to Arizona which also has two Republican Senators that count on an older supporting voter base and there are stories to tell which will inflict significant political risk to Republican Senators.