Americans face two big problems as they get older: a shortage of retirement savings and the skyrocketing cost of health care. Both may be about to get worse after two narrow votes in Congress this week.
On Wednesday, the Senate voted 50 to 49 to undo a regulation, finalized under President Barack Obama, that makes it easier for states to launch retirement savings programs. On Thursday, the House of Representatives voted 217 to 213 to approve the American Health Care Act, or AHCA.
The AARP, the nonprofit organization that advocates for Americans 50 and over, lobbied intensely against both measures and urged its 38 million members to contact their representatives about the health care bill, which AARP says imposes an "age tax" on older Americans.
The House's Republican leaders say the Affordable Care Act, also known as Obamacare, is in danger of collapse and needs to be repealed and replaced. Premiums have risen sharply under Obamacare, among other criticisms.
"We have the opportunity to show that we’ve got the resolve to tackle the big challenges in this country before they tackle us," House Speaker Paul Ryan, a Wisconsin Republican, said, speaking minutes before the vote. The bill is a chance "to stop the drift of arrogant big government policies in our lives and to begin a new era of reform based on liberty and self-determination."
The bill, which faces a rough ride in the Senate and could change substantially, is expected to lower health insurance premiums for many younger Americans, according to the nonpartisan Congressional Budget Office, which analyzed earlier versions of the legislation. The CBO hasn't had time to analyze the final version of the bill, which allows states to opt out of Obamacare rules protecting people with pre-existing conditions. That could end up raising many young people's costs substantially if they've had health issues and live in certain states.
Most older Americans would see costs jump under the AHCA, which allows insurers to charge older customers five times as much as younger ones, compared to three times currently. The bill also changes subsidies on Obamacare marketplaces, from a sliding scale to a flat credit based on age. Excluding subsidies, the CBO calculated that the annual premium for a 64-year-old would rise to $19,500 under the AHCA, from $15,300 under current law, by 2026. After subsidies, a 64-year-old who earns $26,500 annually would pay $14,600 in premiums under the AHCA in 2026, up from $1,700 under Obamacare.
Many older people would simply go without insurance. The CBO projected that under the AHCA, 24 million fewer Americans would be insured by 2026.
At 65, Americans can qualify for Medicare. While that program is mostly untouched by the legislation, the AARP complains that the bill undermines Medicare's already shaky funding. It repeals an additional 0.9 percent payroll tax on high-income workers and a tax on investment income for wealthy Americans, costing the U.S. Treasury $299 billion over the next decade.
Millions of Medicare recipients also rely on Medicaid, the health insurance program for the poor, when they need nursing home care or other services. The AHCA would make Medicaid much less generous by taking an $839 billion bite out of its funding over the next 10 years, the CBO said.