Many seniors won’t fare well under the American Health Care Act, which passed the House last week.
I’m not trying to scare you, but the GOP’s effort to repeal the Affordable Care Act, otherwise known as Obamacare, may mean the amount you need to save for retirement just got higher.
“Americans face two big problems as they get older: a shortage of retirement savings and the skyrocketing cost of health care,” wrote Ben Steverman for Bloomberg in “Washington is making it tougher to retire.”
There are some winners under AHCA. Healthy and wealthy individuals win. Young adults and upper middle-income folks without any preexisting conditions also benefit.
Here’s who will lose:
• Seniors who rely on Medicaid. A change in how the program is funded, which will cap Medicaid outlays, could leave a lot of poor elderly folks without health care.
“A state like Florida, which has a large senior population, could see costs rise fast as its population ages with time,” reports Dylan Matthews for Vox. “But a per capita cap wouldn’t keep up with that. To get around that, the state might be motivated to kick off older seniors and focus enrollment on younger ones.”
For more details read: “These are all the people the Republican health care bill will hurt”
• In most states, older Americans will pay more. “Insurance companies could charge a 64-year-old customer five times the price charged to an 18-year-old one, to cite the most extreme example,” Margot Sanger-Katz reports in the New York Times. “The changes in the subsidy formula would also require older middle-class Americans to pay a much larger share of their health insurance bill. The Congressional Budget Office estimates that far fewer older Americans would have insurance coverage under this bill than under the Affordable Care Act.”
• Got a preexisting condition? You lose. Before there was Obamacare, insurance companies routinely refused coverage for people with preexisting conditions such diabetes, arthritis or heart disease. Or, if people could get coverage, they were charged high premiums, copays and deductibles.
“Companies argued it was the only way to prevent people from waiting to buy insurance until they were already sick,” wrote Maggie Fox for NBC News. “Some supporters of the AHCA say it’s about personal responsibility. After all, why should all the customers of a health insurance plan pay for people who wait until they are sick or injured to buy coverage? But medical groups from the American Medical Association to the Juvenile Diabetes Research Foundation (JDRF) say health insurers often made up their own definitions of preexisting conditions. And they often denied coverage to people born with such conditions, or who developed them in childhood.”
Read this from NBC News: ““U.S. House passes health care bill that would allow states to deny coverage for preexisting conditions”
“AARP is deeply disappointed in today’s vote by the House to pass this deeply flawed health bill,” AARP’s Executive Vice President Nancy LeaMond said in a release. “The bill will put an Age Tax on us as we age, harming millions of American families with health insurance, forcing many to lose coverage or pay thousands of dollars more for health care. In addition, the bill now puts at risk the 25 million older adults with preexisting conditions, such as cancer and diabetes, who would likely find health care unaffordable or unavailable to them.”
Don’t rely on political rhetoric. Read the following stories:
• 50 health issues that count as a preexisting condition
Rolling back protections for people with preexisting conditions could increase health-care costs for an estimated 130 million Americans, reported Alicia Adamczyk for Money.
• How the American Health Care Act leaves near-elderly people behind
“Proportionally, the group of people that would see the most coverage losses under the AHCA is the population of people aged 50 and older,” a report in The Atlantic by Vann R. Newkirk II said. “Although they’re more likely to have coverage in the first place, owing to more stable employment and a higher likelihood of public-insurance coverage, estimates show the uninsured rate of people over 50 would skyrocket from around 13 percent currently to just under 30 percent by 2026.”
This still isn’t a done deal. The House measure now goes to the Senate.
“There are many other problems with this bill from both a liberal and conservative perspective,” wrote Jake Novak for CNBC. “It simply does not fix the growing problems with Obamacare and actually makes them worse by increasing its fiscal liabilities.”
By the way, if you have health insurance and think all this reworking of Obamacare isn’t your problem, think again.
Read this analysis from Salon: “The American Health Care Act will affect you, even if you’re insured through your employer”
I’d like to hear from you. What are your thoughts about the GOP’s answer to Obamacare? Are you worried your health-care costs will rise? Send your comments to firstname.lastname@example.org.
Retirement Rants & Raves
In this feature your voice matters. This is a space in which you can rave or rant about anything related to retirement. So what’s on your mine about your retirement or your planning for retirement (I would especially love to hear from young adults)?
Send your comments to email@example.com. Please include your name, city and state. In the subject line put “Retirement Rants & Raves.”
Last week’s question: Should you pay off your mortgage before you retire?
Lots of you had an opinion about retiring mortgage-free.
Daniel, 62, of Saint Paul, Minn., wrote, “We used retirement funds to pay off our mortgage just before the end of the year.”
But before this couple paid off their mortgage they created a pro and con list. Here’s some of what they realized.
Con: “This decision took a lot of money out of a pretax savings/investment account.”
Pros: “Paying off the mortgage lets me invest in after-tax investments, which further diversifies our portfolio and starts to generate an income stream from our savings. That income will be reinvested until I retire but will provide a nice boost to retirement income when the time comes as well as a pool of money for emergencies. The increased cash flow allows us to pay for things with cash and not worry about financing anything.”
Here’s a good analysis of the pros and cons of keeping a mortgage into retirement from Bankrate.com: Keep the mortgage or pay off the house?
“I was raised by Depression-era parents who pounded into us that debt was bad,” wrote Brian Flanagan of Guilford, Conn. “When I bought my home, I started off with a 30-year mortgage. When things started going crazy in the mortgage market, I refinanced twice. The first time I refinanced into a 15-year mortgage, the second time into a 10-year mortgage. Then I paid that one off early. I retired at 61 after working 38 years for that really rare private-sector company that had a pension, a 401(k) and early retirement medical benefits that will take me to Medicare. I thank God that I didn’t listen to the conventional wisdom of the eighties and nineties about the way to make it was to job hop, and to buy all the house you could afford.”
Read this: The Benefits of Mortgage Repayment
Don DeArmon of Frederick, Md., wrote, “As for the ‘psychology’ of having a paid-off mortgage or being ‘debt-free’ as one approaches retirement: We will still have a big mortgage, but it is far outmatched by what the house will be worth upon sale. Some people want to remain in the same houses they raised their children in. Okay, but realize that represents a major financial and lifestyle choice. We intend to downsize and travel.”
“From years of listening to you I strived to work toward paying off my mortgage before retirement,” one reader, who asked to remain anonymous, wrote. “It’s liberating and freedom! Thanks coach!”
More on the issue from a previous column: Is that tax break worth it?
Live chat this week
Join me on Thurs. May 11 at noon (ET) for a live discussion with Erin Currier, director of financial security and mobility for The Pew Charitable Trusts. The project conducts original research to assess differences in family balance sheets across diverse U.S. households and the degree to which Americans’ short-term economic security relates to their longer-term economic mobility.
Currier will be discussing recent reports by Pew on income volatility and financial shocks. .
Newsletter comments policy
Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)
Have a question about your finances? Michelle Singletary has a weekly live chat every Thursday at noon where she discusses financial dilemmas with readers. You can also write to Michelle directly by sending an email to firstname.lastname@example.org. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read more Color of Money columns, go here.