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John McCain has proposed a health care plan that could cause millions of baby boomers between 55 and 64 to pay more for less. It would dismantle today’s employer-based health insurance system by taking away the tax breaks for employer-sponsored insurance and giving insurers the choice of which state’s regulations to follow. Older Americans with health problems could be denied coverage, and their only option would be an inadequately funded high-risk pool. What’s more, the plan’s capped, slow-growing tax credits would provide less value in a market that allows premiums to increase with age, lessening the affordability of health coverage for most baby boomers over time.
Seventy-two percent of baby boomers with employer-sponsored health insurance have a chronic illness, putting them at risk of losing affordable health coverage under the McCain plan. McCain’s plan would shift Americans from employer to individual-market health insurance. Individual market insurers can deny coverage, carve out benefits, and/or charge higher rates to high- versus low-risk people in most states. Because health risk increases with age, McCain’s plan would have particularly detrimental affects for people ages 55 to 64. People in this age group account for 17 percent of non-elderly adults, yet make up 26 percent of non-elderly adults with at least one chronic illness. About 15 million chronically ill people ages 55 to 64 with employer coverage would be put at risk. This includes: 8.5 million with high blood pressure, 3.0 million with a heart condition, 2.5 million with diabetes, and 2.3 million who have been diagnosed with cancer at some point in their lives.
The flat McCain tax credit provides half the value to older Americans. The McCain plan provides the same fixed-dollar tax credit to all Americans, irrespective of how much it costs to purchase insurance. Because the plan removes, rather than strengthens, rules that prohibit age discrimination in setting premiums, older people will face higher premiums compared to younger people. The McCain plan gives people ages 60 to 64 a tax credit that is 53 percent lower than one that adjusts for premium variation by age. The purchasing power that the credit gives people age 18 to 24 versus 60 to 64 is nearly four times higher.
Medicare spending could increase by at least $2.4 billion a year under McCain’s plan. Among chronically ill people, those who were uninsured prior to enrolling in Medicare at age 65 have health care costs 50 percent higher than those that were previously insured. Even if only 16 percent of chronically ill people age 55 to 64 lose employer-sponsored insurance under the McCain plan, this could double the number of uninsured, ill baby boomers—and increase Medicare spending by at least $2.4 billion per year.
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