As the Baby Boomers age, the ranks of people without health insurance age 50 to 64 are soaring. The AARP Public Policy Institute estimates that 13 percent or 7.1 million adults age 50 to 64 were uninsured in 2007 – 1.9 million more than in 2000, a 36 percent increase. With Baby Boomers pushing this age group to nearly 20 percent of the population in the next seven years, finding a common sense solution to the coverage gap for this population is critical to holding down their health care costs in the short- and long-term and improving their health and financial security. Since people develop more health problems as they age, and people who have coverage tend to be healthier than those who don’t, this age group is at greater risk of illness if they are without coverage or with inadequate coverage.
Barriers to Coverage
There are many barriers standing in the way of Americans ages 50 to 64 finding affordable, quality health care coverage. Although more than half of uninsured Americans in this age group work, they may not be able to get insurance through their employer because they work for a small business that doesn’t offer insurance; they are self employed and can’t buy or can’t afford coverage in the individual market; they are ineligible for benefits because they work part time; or they can’t afford coverage that is offered at work. Those without employer-sponsored coverage are forced to try to find affordable individual coverage.
For people in this age group, finding individual insurance at any price may be impossible primarily because insurers commonly consider prior illness and age when selling coverage. With seven in 10 Americans in this age range having one if not several illnesses – nearly half have two or three chronic illnesses – it’s not surprising they struggle to find coverage. Insurers often turn down their applications or offer coverage at unaffordable premiums. One study of working adults found that 58 percent of those who wanted to buy coverage didn’t because they found it very difficult or impossible to find an affordable individual plan.
For people in this age group, the unfortunate reality is that between 17 and 28 percent of those who sought to buy coverage were turned down, were charged a higher price because of a pre-existing condition, or had a health problem that excluded them from coverage.
The troubling fact is that people in this age range who can actually find individual coverage on average pay premiums that are three times higher and total out-of-pocket spending that is more than twice that of those with employer-provided coverage benefits, despite less generous benefits. In fact, more than 25 percent are spending at least 10 percent of their disposable income on health care.
Problems with Individual Insurance
Today’s individual market is not a viable solution for most people age 50 to 64 without access to other coverage. In this market, people generally must pay the entire premium, without benefit of employer contributions or other subsidies associated with job-based coverage. Individual policies also tend to pay a lower amount of people’s medical costs. For example, one study in California in 2006 found that individual market insurance policies paid for 54 percent of their medical costs for people covered in the individual market, significantly lower than the 83 percent covered through small employer plans. Other research shows that in the individual market, insurance plan deductibles tend to be higher and premiums often vary dramatically by age and gender.
Common Sense Solutions
To fix our broken health care system, AARP believes we must ensure that Americans ages 50 to 64 have affordable health care choices, including by:
- Barring insurers from denying coverage and charging higher rates based on age or health status
- Providing access to coverage for those not covered through an employer, which could be through public programs and/or through a private insurer
- Creating an entity such as a "connector" that would help individuals and small groups find affordable coverage options that meet benefit standards
- Providing adequate subsidies so that total premiums and out of pocket costs do not exceed 10 percent of income and no more than 5 percent for low-income individuals
- Addressing costs throughout the health care system through tools like care coordination and revising incentives to reward quality rather than quantity of care
- Ensuring that any cost-sharing obligations do not create barriers to care.