Baby Boomers and the Affordable Care Act

| May 5, 2014

Senior Couple Talking With A ConsultantThe Affordable Care Act (commonly called “Obamacare”) is the most dramatic change in health care law since Medicare. Of all demographic groups, the one most affected by the new laws is the Baby Boomers – those born between 1946 and 1964. The law has caused employers to reconsider the provision of health care as a benefit for their employees, changed how health insurance is purchased, and altered the transition from traditional insurance to Medicare. All of this impacts the Baby Boomer population as they are reaching retirement age.

The older generation was already covered by Medicare; and the rising generation is younger and healthier. The Baby Boomers are the Ground Zero demographic that will determine the success or failure of the new law.

There are 79 million living Baby Boomers and every day 10,000 of them turn 65. Before the ACA, most of the “boomers” had health insurance as an expected benefit of employment. The Great Recession hit the Baby Boomers particularly hard, and if coverage was not available through employment, the purchase of private insurance presented substantial challenges. Insurers could deny coverage based on pre-existing conditions, or charge premiums that were prohibitive. The new law changes just about everything for the Baby Boomers, who have the potential for tremendous gains in access to coverage; but face a complicated maze they need to navigate with care to make a successful transition.

The key points are:
1. Companies with more than 50 employees must offer health insurance coverage, and other employers will rethink whether health insurance makes economic sense. Many have already decided to terminate coverage, or will offer a cash benefit for employees to purchase their own coverage on the “health insurance exchanges” – an open market for individuals to compare and purchase policies on line. Baby Boomers have signed up in droves, and people ages 55 to 64 make up 31% of new enrollees.

2. The ACA has two distinct advantages to Baby Boomers enrolling through the exchanges. First, coverage is guaranteed issue regardless of medical history, pre-existing conditions. Second, insurers are limited in the premiums that can be charged, so that they cannot exceed 3x the premium charged to the youngest participants.

3. There will be new challenges to Boomers transitioning to Medicare eligibility, requiring them to time their coverage choices carefully. Individuals who qualify for Medicare have to enroll during their Initial Enrollment Period, but should only discontinue their prior health care coverage after enrolling in Medicare. Failure to properly coordinate this enrollment and disenrollment could result in a gap in coverage.

4. The ACA has incentives to encourage preventive care and health living. Today, more than 75 percent of health care costs in the United States arise from chronic diseases, many of which are preventable. Over a million Americans die prematurely each year due to unhealthy lifestyle habits, including tobacco use, obesity, lack of exercise, and alcohol abuse. A study published in 1999 (Journal of Aging and Health) identified 3,099 twins aged 75 or older, studied their health history, and concluded that genetics and heritable factors account for about 25% of life expectancy, and fully 75% of life expectancy attributable to lifestyle and environmental factors.

The Baby Boomers are certainly a key demographic that will determine the success of the Affordable Care Act. How the general population reacts to the law as it gains experience with it over the next few years will be far more important than anything which happens in Washington. The Boomers stand to benefit more from the law than any other generation, but will have to learn a new and complicated language to realize those benefits.

Category: Lifestyle