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Experience in Massachusetts indicates that without strict age rating limits and adequate subsidies, coverage would still be unaffordable for millions of older Americans. Although Massachusetts capped rate variation for factors including age at 2-to-1, affordability remains a significant issue for some AARP members. Even at a 2-to-1 age rating, the lowest priced “bronze” benefit package costs 60-year-olds between $420 and $575 per month. If the rate band were set at 5-to-1, the “bronze” package would cost $1,050 to $1,335 per month, or up to $16,020 a year--over half the median annual income of $30,000 for uninsured Americans aged 50-64 today. AARP’s concern about age rating and subsidies only increases as we consider most other states where rates of the uninsured are higher and family income levels are much lower than in Massachusetts.

Age is a poor proxy for income; older uninsured Americans do not have substantially higher incomes than younger uninsured individuals, whose median income is $28,461, only slightly lower than uninsured 50-64 year olds. Continuing to allow health care coverage to remain unaffordable to those who need it most is a serious societal problem. Uninsured adults in their late 50s and early 60s experience worse health outcomes and use more services when they enter the Medicare program, and in the years before Medicare their uncompensated health care costs will continue to be shifted to those who have insurance.

Hardship exemptions are not an answer, and are cold comfort for those who cannot afford coverage due to high premiums and are in an age bracket where high quality coverage is essential for maintaining health and avoiding preventable conditions that will only increase expenditures once these individuals become eligible for Medicare.

Subsidies: Shared responsibility is an important attribute of the proposed legislation. As the legislation proposes an individual requirement for obtaining health insurance and an employer requirement for providing health insurance, assuring affordability of plan premiums is essential if AARP is to support this legislation. Adequate subsidies for low- and moderate income individuals must be guaranteed. Subsidies must be adequate, available, secure and administratively feasible, and take into account any higher cost related to any level of age rating that is allowed.

For those who are low-income, expansion of Medicaid eligibility across the United States is an efficient and effective way to assure quality coverage and access to care. AARP believes that offering Medicaid as a wrap around benefit or offering subsidies and/or tax credits to help low-income individuals purchase private coverage could mean that the most vulnerable Americans will not benefit from health reform; such a design will lead to unnecessary expenditures as the construct is administratively unfeasible.

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