The Predicament of Near-Seniors And Health Reform

As we approach the legislative endgame, liberals worry that health reform has become so watered-down that it accomplishes too little. Conservatives worry that health reform has become so costly that it does too much. What's the reality? The challenges facing one group of Americans highlight what this year’s health reform is likely accomplish, and what it is likely to leave undone.

“Near-seniors” between the ages of 55 and 64 have a special stake in health reform. Not yet old enough for Medicare, yet old enough for various chronic illnesses to strike, near-seniors have larger expected health costs than younger people. Many face early retirement or an uncertain job market that forces them into the individual health insurance market at precisely the life stage in which many will face higher premiums due to preexisting conditions.

To gauge these concerns, I examined data from the National Health and Nutrition Examination Survey of 3,688 insured and uninsured adults. NHANES is especially useful because it is nationally representative and because it includes an actual medical exam alongside the usual survey questions regarding health status, insurance coverage and service use.

NHANES data show stark difference in health status between near-seniors and their younger brethren. More than one-third of near-seniors indicated that they had at some point been told by a doctor that they suffered from cancer, heart disease, stroke, chronic bronchitis or emphysema. The comparable figure among adults age 21-54 was 12 percent.

There were also significant age disparities in other risk-factors that affect insurance coverage. The majority of near-seniors had diagnosed or undiagnosed hypertension. Three-quarters faced cholesterol issues. These patterns were surprisingly similar among the insured and the uninsured.

Such patterns highlight the importance of insurance market protections for near-seniors, who often pay substantially higher premiums than younger adults. House bill H.R. 3200 and the Senate Health, Education, Labor, and Pensions Committee bill would bar insurers from charging near-seniors more than twice the premiums charged to younger people. Senator Baucus has advanced a 5:1 age gradient (pdf). House and Senate bills also include income-based limits on out-of-pocket spending and insurance premiums that disproportionately affect near-seniors.

All of these issues raise delicate issues of intergenerational equity. Lower limits effectively require younger adults to cross-subsidize older consumers who are often more affluent.

Maintaining affordability for near-seniors is a critical concern, from both a public health and an economic perspective. Research using the same NHANES data indicates that near-seniors encounter greater difficulty controlling hypertension, high cholesterol and diabetes than do adults over the age of 65, virtually all of whom receive Medicare. For the same reasons, race/ethnic and educational disparities in the control of cardiovascular disease markedly declines as seniors reach the age of Medicare eligibility.

Health-related financial burdens may also explain some stark differences in political perspective among older Americans regarding health reform. In polls conducted this year by Peter Hart Associates, 57 percent of 60-64 year-olds who stated a preference said that they supported President Obama’s approach. (Only 18-24 year-olds were more supportive.) Support for the president’s approach drops 18 percentage points among 65-70 year-olds, whose personal stakes are less obvious in universal coverage.

Both H.R. 3200 and the Senate HELP bill would reduce financial burdens facing families who buy coverage within a national insurance exchange. The full impact of these measures on affordability remains to be determined. Under both bills, families with incomes below 300% of the federal poverty line (about $66,000 for a family of four, or about $43,700 for a married couple) would pay far less in premiums and out-of-pocket payments than families currently do in the individual market. Families would also enjoy protection against catastrophic medical bills and against discrimination based on preexisting conditions.

Although these burdens would be reduced, they could remain heavy for some middle-income families facing illness, injury, or disability. Near-seniors poses a special challenge, particularly given the frequent combination of high expected health costs and small family size used to compute affordability credits and limits on out-of-pocket payments.

Consider the situation of a married couple with no children and an annual adjusted gross income of $58,280 (400% of the federal poverty line). As I compute things, H.R. 3200 would cap their maximum monthly premium at about $534. In the event that one or both experience costly illnesses, they could also be liable for up to $833 per month in out-of-pocket expenses. This is a marked improvement over current coverage available on the individual market. Yet in the worst case, this couple’s health spending burden could exceed 28 percent of income. Couples with slightly higher incomes could face even greater burdens.

These burdens could increase if affordability credits are reduced in negotiations over the final bill or if the final legislation reflects Senator Baucus’ draft language within the Senate Finance Committee. His proposal would not only permit sharper age-gradients in insurance premiums. It would also remove limits on out-of-pocket medical spending for those with incomes above 300 percent of the poverty line.

From the President’s perspective, the differing interests and preferences of seniors and near-seniors reflect the perils of incremental reform in reaching universal coverage. His ability to mobilize near-seniors’ to support Democratic plans may determine the immediate political fate of 2009 proposed reforms. If something is passed this year, the predicament of near-seniors suggests two things: First, health reform will be milestone legislation that will help millions of people. Second, much will remain to be done to make health care affordable for the people who need it most.

Harold Pollack is a public health policy researcher at the University of Chicago's School of Social Service Administration, where he is faculty chair of the Center for Health Administration Studies