State-by-State Estimates of the AHCA’s 2018 Rate Hikes and Age Tax

By Emily Gee and Thomas Huelskoetter

The American Health Care Act (AHCA) as passed by the House of Representatives would slash subsidies and repeal other federal policies that help make health coverage affordable nationwide. Two particularly notable consequences of the House-passed bill would be widespread premium hikes in 2018 and severe premium increases for older Americans in 2026.

The effect of the AHCA on premiums would be almost immediate. The Congressional Budget Office (CBO) estimates that the AHCA would increase individual market premiums by 20 percent in 2018, largely due to elimination of the individual mandate. The Center for American Progress estimates that this 20 percent rate hike would increase the average annual premium in the marketplace by $1,130 in 2018. These 2018 premium increases would vary by state, as shown in Table 1, from a $766 increase in the average in Utah to $2,449 increase in the average in Alaska.*

In addition to overall rate hikes in the near term, older Americans would face massive premium increases over the next decade due to the AHCA. This is because the AHCA would weaken the Affordable Care Act’s (ACA) rule that limits how much insurers can vary premiums based on age. The AHCA would allow insurers to charge older enrollees five times more than younger enrollees starting in 2018, as opposed to three times as much under current law.

AARP, among other consumer groups, has criticized the AHCA’s wider age band as an age tax that would make it harder for near-elderly people to afford health care. The Senate’s version of the bill is currently also expected to allow higher premiums for near-elderly people.

The policy would hurt low-income individuals the most. Although the AHCA provides premium tax credits that would increase along with age, the subsidies would be insufficient to make up the difference in premiums for older Americans. After taking into account available tax credits, the CBO projected that in 2026, the annual premium for a 64-year-old individual with a low-middle income of $26,500 would be $1,700 under the current law but would soar to $16,100 under the AHCA.

CAP estimated the net premium increases that near-elderly enrollees would face under the AHCA’s age tax relative to under the ACA in each state. We used government data to calculate how much higher or lower each state’s average 2017 benchmark silver premiums would be compared with the overall average.** We then used those factors to adjust the CBO 2026 projected premium for the states that would continue to maintain protections for people with pre-existing conditions and require plans to cover the ACA essential health benefits.

Under the ACA, premium tax credits would automatically adjust such that a 64-year-old with an income of $26,500 would pay only $1,700 for silver benchmark coverage in any state in 2026. By contrast, the AHCA tax credits would be fixed, and their generosity would not vary to account for local premium costs.

Estimates for all states with available data are available below in Table 2. For example, the average 64-year-old West Virginian making an income of $26,500 in 2026 would pay a net premium of $22,400 per year under the AHCA, compared with just $1,700 per year under the ACA—a $20,700 increase in annual costs. The age tax would be much higher in states where health care costs are high. The ACA subsidies would ensure that a similar Alaskan would pay only $1,700 for coverage, but under the AHCA, that person would owe $49,070 toward coverage. Thus, the AHCA’s age tax in Alaska would be more than $47,000 per year.

As these estimates demonstrate, the AHCA would drive sharp rate hikes for all individual market enrollees starting next year and would make health care prohibitively expensive for older enrollees. Simply put, the AHCA would make health coverage harder, if not impossible, to afford for millions of Americans.

Emily Gee is the health economist for the Health Policy team at the Center for American Progress. Thomas Huelskoetter is the policy analyst for the Health Policy team.

* Our 2018 rate increase analysis is limited to the states that reported an average 2017 premium to the Centers for Medicare and Medicaid Services.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work