Inflation that tracks your march to death

As the ACA-compliant individual market shuddered under a second consecutive round of premium hikes averaging well north of 20% in 2018, I took in an earful of stories from people in their fifties and sixties who were paying full freight, partly recounted here.

One thing that struck me somewhere along the way is the impact of the personal inflation hit induced simply by aging. In the best of markets, late-middle-agers will pay 4-5% more in many years simply for getting a year older. That's a turbo-charge to double-digit hikes for everyone (particularly for couples).

David Anderson, who may do a more analytical post about this, was kind enough to pull an ACA age rating chart for me. I begin at age 45,  just before price increases accelerate. This is for one bronze plan in Arizona:

AHCA vs. ACA: Total subsidized shares of costs at different income levels and ages

Late last year I cooked up a simple measure of the value of any given health insurance subsidy: the percentage of the premium paid multiplied by the actuarial value (AV) of the insurance obtained. AV is the estimated percentage of the average enrollee's medical costs paid for by the insurance.

In traditional Medicare, for example, for all but the highest-earning 5% of enrollees, the federal government pays about 85% of the combined premium for Parts A,B and D - which have a combined actuarial value a bit north of 80%. Hence the total subsided share of costs (can we call it TSS?) is about 69%.  Employers, according to the Kaiser Family Foundation, pay an average of 82% of the premium for individual insurance and 71% for family coverage. Given an average AV of 82% -- also a Kaiser estimate -- that yields a TSS of 66% for individual coverage and 58% for family.

I've previously estimated (see first link above) that the average subsidized ACA marketplace enrollee obtains a TSS of 59% -- with the federal government picking up an average of 73% of the premium for insurance with an average AV of 81%. Subsidies vary tremendously, however, ranging from 0% for the half of individual market enrollees who don't qualify for any help to over 90% for the lowest income enrollees obtaining silver plans enhanced with Cost Sharing Reduction.

Now, with the help of CBO analysis of the House repeal-and-replace bill, the American Health Care Act, it's possible to compare the federal TSS for people of varying income and ages under the ACA and the AHCA.