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Trump’s first health care action may be to let insurers charge older people more for insurance

Andrew Prokop is a senior politics correspondent at Vox, covering the White House, elections, and political scandals and investigations. He’s worked at Vox since the site’s launch in 2014, and before that, he worked as a research assistant at the New Yorker’s Washington, DC, bureau.

On his first day in office, President Donald Trump signed an executive order instructing his agencies to dismantle the Affordable Care Act “to the maximum extent permitted by law.” But what that would actually mean in practice has remained extremely unclear. The administration has drawn up a proposed new rule, but its content isn’t yet public.

However, the Huffington Post’s Jonathan Cohn reports that, according to “industry consultants and lobbyists,” the administration is considering a few executive changes affecting the insurance market. The first among them would let insurers charge older people higher premiums than they’re currently allowed to under Obamacare.

The background is that, under the Affordable Care Act’s “age bands,” insurers in the individual markets are allowed to charge their oldest customers a maximum of three times as much as their younger customers for premiums. The Trump administration’s proposed rule would change that, allowing older customers to be charged 3.49 times as much.

“According to sources privy to HHS discussions with insurers, officials would argue that since 3.49 ‘rounds down’ to three, the change would still comply with the statute,” Cohn writes.

Now, there’s a policy rationale here. Older people use, on average, much more health care than younger people, so it’s much more expensive for insurers to cover them — more than three times as expensive. So if insurers can only charge older people three times as much as anyone else, they’ll need to come up with the rest of the money for their care by charging everyone else relatively more.

This is what has happened under Obamacare. The catch is that if insurance becomes too expensive for younger, healthier people, they might respond by not getting it. That would make the insured population sicker as a whole and therefore even more expensive to cover.

So the Trump administration is likely hoping that this policy change could make insurance cheaper for younger people and get more of them in the market, bringing down average costs overall. Still, the upshot of this change would be that more of the health costs for older, sicker people will fall on those people themselves, rather than being spread across the whole population. This wouldn’t fall primarily on the oldest voters, who generally have Medicare, but rather on people in their 50s or early 60s who buy insurance on the exchanges.

And given that Trump’s support was strongest among older voters — exit polls suggest that Trump won voters aged 50-64 by a 6-point margin — it’s striking that his first anti-Obamacare move may be to let insurers charge older people more for insurance. These are the types of policy tradeoffs he and the GOP will have to make as they grapple with health reform, and there will certainly be losers from these changes.

“Insurers left to their own devices would charge older people 5-6 times what they would charge younger people. From a pure insurance point of view, restrictions on age rating are a bad thing,” says Larry Levitt, a health policy expert at the Kaiser Family Foundation. “It’s really a question of values. Do we think older people should have to pay that much more for health care?”

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