Policymakers Ponder Role Of Feds In Helping Uninsured Boomers

U.S. health insurance groups now seem to agree with consumer groups that the government should help baby boomers with health problems buy health coverage.

Although the health insurance trade groups and producer groups would prefer to see the government rely mainly on private insurers and market forces, many consumer groups would like to see the government open Medicare or the federal employee health plan to some or all "near-elderly adults."

The federal budget deficit could put off action on health coverage for older boomers. But, if Congress does act, it could add an important tool to boomer advisors' toolbox.

Even advisors who have nothing to do with health insurance run into boomer clients with diabetes or mild asthma who must scramble to find health coverage before they can even begin to think about long-range financial planning.

Few policymakers weep many tears about the plight of high-income uninsured U.S. residents, but a new report from the U.S. Census Bureau shows that about 34% of the survey participants who were uninsured in 2004 came from households with annual incomes over $50,000. About 18% of the uninsured survey participants had annual household incomes over $75,000.

While the number of uninsured residents in households with annual incomes under $25,000 rose only 1.2%, the number of uninsured residents in households with annual incomes over $50,000 jumped 7.6%, to almost 16 million.

Census Bureau researchers do not provide "cross tabs" for the uninsurance rate among high-income individuals who happen to be baby boomers. But about 20% of all uninsured individuals are in the baby boomer age range. Crude extrapolations suggest that the number of uninsured baby boomers with annual household incomes between $50,000 and $75,000 may have increased to 1.7 million in 2004, up from 1.5 million in 2003, while the total number of uninsured boomers with household incomes over $75,000 may have held steady at around 3 million.

Meanwhile, survey figures from America's Health Insurance Plans, Washington, imply that a significant minority of older baby boomers has trouble qualifying for individual health coverage.

The average "offered rate" for all consumers who applied for medically underwritten individual health coverage in 2004 was only 75% for boomers in the 55-60 age category, compared with a national average of 88% for all U.S. residents and 87% for the boomers in the 40-44 age category.

Older baby boomers have such a hard time getting coverage because about 70% of them already suffer from chronic conditions such as high blood pressure, says Sara Collins, a senior program manager at The Commonwealth Fund, New York, a health policy think tank.

AHIP emphasizes that fewer than 3% of uninsured U.S. residents lack health coverage because health insurers have refused to insure them.

But "we do believe state and federal policymakers can take steps to address this segment," AHIP spokesman Larry Akey says.

Consumer groups are leery of the idea of using risk pools to help older boomers.

Many risk pools offer expensive, bare-bones coverage that exposes consumers to the threat of big out-of-pocket expenses, Collins says.

Collins prefers the idea of encouraging older boomers to enroll in Medicare, and she says that could cost a total of less than $350 per month per insured.

When Collins' team asked U.S. residents about their interest in buying into Medicare, "we found that about 26% of the 50- to 60-year-olds who were not on Medicare were willing to pay up to $200 per month for it," Collins says.

But the government would have to subsidize the gap between $200 per month and $350 per month.

Jim Oatman, chief actuary for individual medical insurance at Assurant Health, Milwaukee, a unit of Assurant Inc., New York, says he likes the idea of expanding the risk pool program.

In states such as New York that try to expand access to health coverage by requiring health insurers to offer roughly the same rates to all individuals in a given community, health coverage costs about 2.5 times the national average, Oatman says.

In states that allow medical underwriting and use risk pools to provide coverage for consumers with health problems, rates for healthy residents are at or below the national average, and the risk pool rates are only 50% to 125% higher than the national average, Oatman says.

The risk pool "is a better deal even for people who are sick, and it's a much better solution for people who are healthy," Oatman says.

Another private-sector approach to helping high-income and middle-income boomers with health problems buy coverage is to develop policies that set high deductibles for specific preexisting conditions, Oatman says.

Assurant, for example, now can set specific high deductibles for conditions such as asthma in many states, Oatman says.

The specific-condition deductible might enable Assurant to offer high-quality, affordable and conventional coverage to a boomer who otherwise would have had to turn to a risk pool or go without health coverage altogether, Oatman says.

Older and Creakier

Boomers Pay More Health Coverage And Face More Denials As They Age . . .
Age Category	% of Applicants Receiving Offer Of Coverage	Average Cost for Individual Coverage
40-44	87%	$2,262
45-49	84%	$2,638
50-54	80%	$3,173
55-59	74%	$3,775
Source: America's Health Insurance Plans, Washington

Policymakers Ponder Role Of Feds In Helping Uninsured Boomers

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