Medicaid and ACA Cuts Will Increase Costs for Older Adults and Medicare

As taken from Health Affairs. This report magnifies the impact of Trump and the Republican piece of garbage healthcare bill. A bill which targets those who have low income, are older, and make more than the 400-percent-of-the-federal-poverty-level subsidy cliff. The subsidy increase about 500% FPL was to help more people, families, and older people qualify for healthcare insurance under the ACA. The administration is targeting people using Medicaid and is hell-bent on kicking them off of Medicaid.

As taken from the Family Health Project: “One thing is for certain: poverty is persistent. The percent of Americans in poverty has barely moved a tick over the past fifty years. Today, 11.6% of the US population is in poverty. In 1973, the figure was 11%. The poverty rate has remained relatively steady despite economic swings. Though there are numerous obstacles at play, anti-poverty programs are mired in myths, including the myth: The poor are lazy.“

That Republicans claim a false belief in that the poor do not work. Such is is blatantly false. To disqualify them from Medicaid will increase the numbers who can not work as families become ill and they suffer similar.

“Work requirements rarely incentivize the poor to work any longer or harder than they already do,. This according to a Harvard research study. The truth is people in the US work hard. Sometimes, they take on multiple jobs. They still have trouble covering essential expenses: rent, utilities, health care, and groceries to last the week.“

The Big Republican Cost-Shift: Massive Cuts to Medicaid and the ACA Will Increase Costs for Older Adults and Medicare, Health Affairs

On May 22, Republicans in the House marshalled through $803 billion in cuts to Medicaid, the Children’s Health Insurance Program, and the Affordable Care Act (ACA). These are bedrock programs providing health insurance and long-term care to over 100 million Americans. These cuts, or “savings,” are intended to offset the 120th Congress’ desire to extend the 2017 tax cuts. Cuts which primarily benefit wealthy Americans. So how do these cuts generate savings? According to the Congressional Budget Office (CBO), it happens by taking healthcare coverage away from nearly 14 million Americans.

The biggest drivers of these cuts are the mandatory work reporting requirements for Medicaid expansion beneficiaries (the vast majority of whom are already working), and not extending the Inflation Reduction Act’s (IRA) enhanced ACA tax credits. The Republicans in Congress also have a “death by a thousand cuts” plan to generate savings by making smaller, albeit equally harmful cuts under the guise of tackling Medicaid and ACA Marketplace fraud, waste, and abuse. These claims persist even as I and others and have explained (and as even the first Trump administration acknowledged) that such claims against Medicaid are significantly overblown, and despite actions already taken under the Biden Administration to protect consumers from uncouth ACA Marketplace agents and brokers.

Much has been written about how imposing Medicaid work requirements and ending the enhanced ACA tax credits will lead to significant coverage losses. But these policy changes, along with the smaller, equally bad changes for which the House Republicans voted – like rolling back Biden-era Medicaid eligibility and enrollment rules – represent a significant shift in health care costs to older adults, as well as to Medicare—with everyone (i.e. American taxpayers) having to spend more on health care as a result. Not only will older adults have to pay more, but they’re also likely to be sicker and experience a higher mortality rate because of these changes.

Older Adults Will Likely Have To Pay More For Health Care

There are three provisions in the House passed reconciliation bill that will increase costs for older adults: (1) mandatory Medicaid copayments for Medicaid expansion adults with income above the poverty line;

(2); making it harder for older adults to enroll in the Medicare Savings Program (MSP); and

(3) reducing Medicaid’s retroactive coverage period to just one month.

Mandatory Copayments

Under current Medicaid rules, states have significant flexibility to set copayment amounts for beneficiaries. Most states don’t apply copays, but for those that do, they’re generally pretty small – ranging from $1 to $4 depending on the service. For example, in North Carolina, going to the doctor or to the emergency room (ER) for a non-emergent issue will cost a beneficiary $4. In Ohio, a non-emergent ER visit will cost $3, but there’s no charge to go see a doctor. Some Medicaid beneficiaries in Washington D.C. may have $1 copay for prescription drugs and a $2 copay for glasses. 

But the Republicans in the House have upended these rules with every state having to charge a copay “in an amount greater than $0” but less than $35 on older adults who live just above the poverty line for most health care services (primary, pediatric, prenatal, behavioral health and emergency care is excluded). This is a remarkable change that will increase health care costs for people who can least afford it while also reducing access to care, with even Republican Senator Josh Hawley commenting on how they’re “a hidden tax on working poor people.”

Obstacles To Accessing the Medicare Savings Program

All this comes on top of rolling back Biden-era Medicaid eligibility rules that make it easier for people to enroll in MSP – a program that lowers Medicare costs for poor older adults. In an earlier article, I wrote about how Biden-era rules help increase efficiency, reduce unnecessary administrative burden, and remove barriers for seniors enrolling in and keeping their coverage. One way they do this is by using information that the government already has to determine who is eligible for and would benefit from MSP. For example, Medicare beneficiaries who also receive Supplemental Security Income, meaning they were already determined to have a disability and low annual income, are automatically enrolled into MSP. This program saves money for enrollees through lower Medicare premiums and prescription drug costs.

The CBO estimates that repealing the Biden-era rules will cause 2.3 million people to lose their Medicaid coverage and 600,000 people to lose their coverage altogether. For the nearly 1.4 million people who are enrolled in both Medicaid and Medicare, losing their Medicaid coverage could be devastating. A recent study shows the importance of Medicaid and its ability to lower Medicare costs for dually eligible older adults. When these adults lost their Medicaid coverage, not only did their costs go up, but their mortality rates went up as well. Another study shows that losing Medicaid coverage and access to lower prescription drugs will result in an additional 18,200 deaths among Medicare beneficiaries each year

Reducing Retroactive Coverage

Under current Medicaid rules, Medicaid will pay a beneficiary’s incurred health care costs up to 3 months prior to their application date if they had been otherwise eligible during this period. We know having coverage significantly reduces people’s medical debt, and this three-month “retroactive coverage” protection helps low-income people reduce their medical debt. Measuring this protection has proven challenging. The data from an Indiana’s Medicaid section 1115 demonstration (which waived the 3-month retroactive coverage period) shows that the nearly 14 percent of beneficiaries who would have been reimbursed under retroactive coverage incurred costs averaging $1,561 per person. The financial risk for older adults could be even greater given that they often have higher expenses on average and are also more likely to experience health shocks. Effectively reducing this retroactive coverage period by two-thirds, the Republican house passed bill will reduce the program’s financial protection, likely saddling more poor older adults with higher medical debt.

More Uninsured Older Adults Means Higher Medicare Costs

Medicaid expansion is a critical source of coverage for older adults: over six in ten adults ages 50 to 64 enrolled in Medicaid are covered thanks to the ACA’s Medicaid expansion. Studies show, when older adults are covered by Medicaid, they are healthier, have fewer chronic conditions, and consume less health care before and after they enroll in Medicare. Thanks to improved health, older adults covered by Medicaid expansion have better mortality rates. From 2012 to 2020, Medicaid expansion adults were less likely by half to die than those not covered by Medicaid. Another study shows that for low-income adults aged 55 – 64, Medicaid expansion coverage reduced mortality by over nine percent.

But all of these protections are in jeopardy because of the House Republicans’ plan to impose mandatory work reporting requirements on Medicaid expansion adults. We know that when Arkansas implemented its work reporting requirements, 18,000 people lost coverage; using that experience as guide, roughly 7 million could lose coverage. However, given the draconian nature of the plan and variability in state implementation, more people could lose coverage. In fact, one estimate shows a range of over 9 million to 14 million. Meanwhile, research shows that work reporting requirements do not lead to job increases, but rather more medical debt and delayed care.

It is likely that more than 6 million older adults enrolled in Medicaid would be subject to the Republican work reporting requirements. Even though over half of 50 – 64-year-old Medicaid beneficiaries are already working, they are at risk of losing coverage simply because they didn’t fill out the paperwork correctly.

One example was illustrated in the Washington Post which reported on people such as Arkansan Adrian McGonigal. Despite living with Chronic Obstructive Pulmonary Disease, he did have a job. Unfortunately, McGonical made an error in reporting that job to state officials. That error led state officials to cancel his Medicaid coverage, which in turn, made it impossible for McGonigal to afford the medicine he needed to work. Eventually, his employer chose to let him go. As the Post columnist Catherine Rampell put it:

“A policy intended to help people get jobs instead cost McGonigal his.” 

Among those in the 50 to 64 age group who weren’t working, the most common reasons, given among almost one in six, were illness or disability.

Against this backdrop, readers may ask: How will this increase costs for Medicare and all taxpayers? The loss of Medicaid coverage for 50 – 64-year-olds means people will be sicker when they enroll in Medicare at age 65. Without access to preventive care visits, prescription drugs, and management of chronic conditions, Medicare will have to spend more to treat conditions that could have been easily diagnosed and managed if people had had Medicaid coverage. One study shows that those who lose Medicaid coverage before Medicare enrollment have higher utilization of services the longer they are uninsured, with a higher percentage of inpatient hospitals, longer hospital stays, more outpatient surgeries and greater out-of-pocket spending 10 years after enrolling in Medicare.

Older Adults Will Pay Higher Premiums Because Of Expiring Enhanced Tax Credits And Other ACA Changes

Much has been written about the number of people who will lose their ACA Marketplace coverage if Congress does not extend the IRA’s enhanced premium tax credits. The CBO projects more than 4 million consumers will lose their coverage. For those who remain insured, monthly premium payments are expected to increase by over 75 percent on average. Some people in some states will see their payments more than double. Nearly 5 million adults aged 50 – 64 could face higher premiums, with many seeing an average premium increase of more than $4,000 in 2026 alone.

These increases are particularly hard on older adults for two reasons:

• First, insurers can charge them up to three times the premium charged to a younger adult.

• Second, older adults are more likely to hit the 400-percent-of-the-federal-poverty-level subsidy cliff, which had been eliminated first by the American Rescue Act and then by the IRA).

The fix to the 400-percent subsidy fix would be undone by the House bill.

The subsidy cliff is of particular concern for older adults who generally have higher incomes but are also faced with higher premiums and more significant premium growth over time. In 2022, The Centers for Medicare & Medicaid Services’ report, adults over age 55 made up nearly half of the HealthCare.gov enrollees. Those having incomes over 400 percent of the poverty level in 2022, compared to 28 percent under 400 percent would be impacted. The IRA’s enhanced tax credits have led to critical lower premium costs for older adults, especially for those above the 400 percent tax credit cliff. One study shows that after the subsidies were expanded, premiums were 35 percent lower for a 50-year-old enrollee income just above the 400 percent cliff, and a whopping 60 percent lower for a 64-year-old enrollee at the same income level.

On top of this, the House passed bill includes technical changes that will only further increase premiums and out-of-pocket costs for older adults.

• First, the bill would reinstate funding for cost-sharing reductions. While this sounds like a good thing, it would actually cause premiums for bronze, gold, and platinum plans to increase. As my former colleague modeled, a married couple, each 60 years of age, earning $62,000 would see their gold plan premium jump from $355 today to $900 next year – a whopping 153% increase.

• Finally, the bill will also change how premiums and maximum-out-pocket costs are adjusted, passing on more cost-sharing to consumers over time.

What’s Next?

The Senate is now set to consider the Republican-passed House reconciliation package. A bill that amounts to the largest cut to Medicaid in its nearly 60 years. Someone has to pay the price. In significant ways, it will be older adults as well as the American taxpayer. The evidence is clear. Affordable and accessible coverage through the ACA’s Medicaid expansion and the IRA’s enhanced premium tax credits have:

• lowered health care costs,
• improved health outcomes, and
• saved lives.

What is also clear is the Congressional Republicans’ “One Big Beautiful Bill Act” will increase health care costs for older adults and Medicare. At the same time, the bill is taking coverage away from nearly 14 million people.