Dear Chairmen and Ranking Members:

AARP, with its nearly 38 million members in all 50 States… is a nonpartisan, nonprofit, nationwide organization that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to consumers and families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse.

We write today to express our opposition to the American Health Care Act (AHCA).

This bill would weaken Medicare’s fiscal sustainability, dramatically increase health care costs for Americans aged 50-64, and put at risk the health care of millions of children and

adults with disabilities, and poor seniors who depend on the Medicaid program for long-

term services and supports and other benefits. Our members and older Americans believe that Medicare must be protected and strengthened for today’s seniors and future generations. We strongly oppose any changes to current law that could result in cuts to benefits, increased costs, or reduced coverage for older Americans.

According to the 2016 Medicare Trustees report, the Medicare Part A Trust fund is solvent until 2028 (11 years longer than pre ACA), due in large part to changes made in the ACA.

We have serious concerns about …the repeal of the additional 0.9 percent payroll tax on higher-income workers.  Repealing this provision could hasten the insolvency of Medicare by up to 4 years and diminish Medicare’s ability to pay for services in the future.

Older Americans use prescription drugs more than any other segment of the U.S.

population, typically on a chronic basis.  We are pleased that the bill does not repeal the

Medicare Part D coverage gap (“donut hole”) protections created under the ACA.

Since the enactment of the law, more than 11.8 million Medicare beneficiaries have saved

over $26.8 billion on prescription drugs.

We do have strong concerns that the AHCA repeals the fee on manufacturers and importers of branded prescription drugs, which currently is projected to add $25 billion to the Part B trust fund between 2017 and 2026. AARP believes Congress must do more to reduce the burden of high prescription drug costs on consumers and taxpayers and is willing to work with you on bipartisan solutions.

About 6.1 million older Americans age 50-64 currently purchase insurance in the non-group market, and nearly 3.2 million are currently eligible to receive subsidies for health insurance coverage through either the federal health benefits exchange or a state-based exchange.  We have seen a significant reduction in the number of

uninsured since passage of the ACA, with the number of 50-64 year old Americans who are

uninsured dropping by half. Affordability of both premiums and cost-sharing is critical to older Americans and their ability to obtain and access health care. A typical senior seeking coverage through an exchange has a median annual income of under $25,000 and already pays significant out-of-pocket costs for health care. We have serious concerns that the bill under consideration will dramatically increase health care costs for 50-64 year olds who

purchase health care through an exchange due to a) the changes in age rating from

3:1 (already a compromise that requires uninsured older Americans to pay three times

more than younger individuals) to 5:1 and b) reductions in current subsidies for older

Americans.  Age rating plus premium increases equal an un-affordable age tax.

Our previous estimates on the age-rating change showed that premiums for current coverage could increase by up to $3,200 for a 64 year old, while reducing premiums by only about $700 for a younger enrollee. Significant premium increases for older consumers will make insurance less affordable, will not address their expressed concern of rising premiums, and will only encourage a small increase in enrollment numbers for younger persons.

In addition, the bill proposes to change current subsidies based on income and premium

levels to a flatter tax credit. The change in structure will dramatically increase premiums for older consumers, as per the Brookings Institute, “Paying for an ACA Replacement Becomes Near Impossible if the Law’s Tax Increases are Repealed”. We estimate that the bill’s changes to current law’s tax credits could increase premium costs as follows:

55-year old earning $25,000     by more than $2,300 a year.

64-year old earning $25,000     by more than $4,400 a year,

64-year old earning $15,000      by more than $5,800 a year.

55-year old earning $25,000     by more than $3,600 a year.

64-year old earning $25,000     by more than $7,000a year,

64-year old earning $15,000      by more than $8,400 a year.

AARP opposes the provisions of the AHCA that create a per capita cap financing structure in the Medicaid program. We are concerned that these provisions could endanger the health, safety, and care of millions of individuals who depend on the essential services provided through Medicaid. Medicaid is a vital safety net and intergenerational lifeline for millions of individuals, including over 17.4 million low-income seniors and children and adults with disabilities who rely on the program for critical health care and long-term services and supports (LTSS, i.e., assistance with daily activities such as eating, bathing, dressing, managing medications, and transportation).

Of these 17.4 million individuals: 6.9 million are ages 65 and older (which equals more

than 1 in every 7 elderly Medicare beneficiaries); 10.5 million are children and adults

living with disabilities; and about 10.8 million are so poor or have a disability that they

qualify for both Medicare and Medicaid (dual eligibles). Dual eligibles account for

almost 33 percent of Medicaid spending. While they comprise a relatively small

percentage of enrollees, they account for a disproportionate share of total Medicare and

Medicaid spending. Individuals with disabilities of all ages and older adults rely on critical Medicaid services, including home and community-based services (HCBS) for assistance with daily activities such as eating, bathing, dressing, and home modifications; nursing home care; and other benefits such as hearing aids and eyeglasses. People with disabilities of all ages also rely on Medicaid for access to comprehensive acute health care services. For working adults, Medicaid can help them continue to work; for children, it allows them to stay with their families and receive the help they need at home….

In providing a fixed amount of federal funding per person, this approach to financing

would likely result in overwhelming cost shifts to states, state taxpayers, and families

unable to shoulder the costs of care without sufficient federal support. This would result

in cuts to program eligibility, services, or both– ultimately harming some of our nation’s

most vulnerable citizens.

In terms of seniors, we have serious concerns about setting caps at a time when per-beneficiary spending for poor seniors is likely to increase in future years. By 2026, when Boomers start to turn age 80 and older, they will likely need much higher levels of service — including HCBS and nursing home — moving them into the highest cost group of all seniors. As this group continues to age, their level of need will increase as well as their overall costs. We are also concerned that caps will not accurately reflect the cost of care for individuals in each state, including for children and adults with disabilities and seniors, especially those living with the most severe disabling conditions.

AARP is also opposed to the repeal of the six percent enhanced federal Medicaid match for states that take up the Community First Choice (CFC) Option. CFC provides states with a financial incentive to offer HCBS to help older adults and people with disabilities live in their homes and communities where they want to be. About 90 percent of older

adults want to remain in their own homes and communities for as long as

possible. [5]

HCBS are also cost effective. On average, in Medicaid, the cost of HCBS

per person is one-third the cost of institutional care.[6] Taking away the enhanced match

could disrupt services for older adults and people with disabilities in the states that are

already providing services under CFC.

AARP has concerns with the removal of the state option in Medicaid to increase the

home equity limit above the federal minimum. This takes away flexibility for states to

adjust a Medicaid eligibility criterion based on the specific circumstances of each state

and its residents beyond a federal minimum standard.

Although we cannot support the American Health Care Act, we are pleased that the bill

does not repeal some of the critical consumer protections included in the Affordable

Care Act, such as guaranteed issue, prohibitions on preexisting condition exclusions,

bans on annual and lifetime coverage limits and allowing families to keep children on

their policies until the age of 26.

Also, AARP does support restoring the 7.5 percent threshold for the medical expense deduction which will directly help older Americans struggling to pay for health care, particularly the high cost of nursing homes and other long-term services and supports.

We look forward to working with you to ensure that we maintain a strong health care

system that ensures robust insurance market protections, controls costs, improves

quality, and provides affordable coverage to all Americans.

If you have any questions, please feel free to contact me, or have your staff contact Megan O’Reilly, Director, Federal Health and Family at (202) 434-3750.

Sincerely,

Joyce A. Rogers

Senior Vice President

Government Affairs