It’s easy to dismiss Jane Ellison.
She’s an 84-year-old who retired from the Louisiana Department of Agriculture in 2004 and lives on a state pension of $1,972 per month.
This is not Asia or Latin America with traditions of filial piety. In the youth-centric United States, old folks are on their own.
Miss Jane is fine with that. Her time has passed, so she’s content keeping her little corner tidy.
As a senior citizen, she is not in the right demographic, at least for insurance purposes, so her task is often messy. And if President Donald Trump’s tax cut package passes, it’ll get a lot more complex.
Over this past month, Ellison had a taste of the coming chaos when the state Office of Group Benefits announced that her monthly payments for a $25,000 term life insurance policy would go up from $13 to $113. The higher premium eats up about 8 percent of the $1,200 she has available after paying $466 for her modest Baton Rouge townhouse, $175 for taxes, and $106 for health insurance. The extra $100 to keep the life insurance would cut into how much Ellison can spend on food, electricity, phone, pharmaceuticals and medical deductibles.
“I don’t know where I can find the money,” she said. “I could get a job; my mind is still sharp, if my body would let me. I’m 84, I have health issues.”
True, it’s only a life insurance policy. But that policy is about the only money the 30-year state civil servant can leave her children when she dies.
“Basically,” said Frank L. Jobert Jr., with Retired State Employees Association of Louisiana, “their decision is whether they want to use the money themselves while they’re alive or to spend that money to help their families pay for their burial. It’s that type of choice.”
Miss Jane and 40,000 other elderly state pensioners called just everyone they could when the increase was announced in mid-October. The state is trying — though House Appropriations balked Friday on approving a new contract — to the limit the monthly premium hike in 2018 to a little more than double rather than an 800 percent increase that the insurer initially wanted.
Louisiana legislators will be asked Friday morning to approve doubling the cost of life insurance, starting Jan. 1, for most retired state workers.
The reason for the increase is because of the way private insurance companies calculate the rates they charge on all the policies they offer.
Companies generally cover their costs by selling more policies to customers less likely to use the insurance than to those who do, explained Tommy Teague, the chief executive officer of Louisiana’s Office of Group Benefits, which oversees insurance for state employees and retirees. About twice as many elderly retirees had signed up for a life insurance policy as had younger workers, leaving the private insurer, Prudential Finance, losing about $4 million a year, he said. Private insurance companies simply, understandably, wouldn’t renew the contract for 2018 at the flat rate state workers had paid for years, even though the bulk of the policyholders were on limited fixed incomes.
“We had no choice,” Teague said.
This was life insurance. But that same private market calculus is used – and will have far greater consequences to older people all across the country – when applied to health insurance.
The bills being forwarded in Congress to cut taxes by $1.5 trillion include language that impacts who will sign up for health insurance policies.
But, the congressional Joint Committee on Taxation projects that taxes would increase dramatically on Americans earning less than $30,000 by 2021 and on taxpayers earning less than $75,000 by 2027. That’s largely because a U.S. Senate version of the Trump tax plan repeals the requirement – called the “individual mandate” – that nearly everyone either purchase health care insurance or pay a fine.
It’s a twofer for Republicans. They can undermine the federal Affordable Care Act while at the same time raise money to cover part of the proposed increase in the Child Tax Credit.
But that comes at a cost, primarily to old people on fixed incomes. Medicare doesn’t cover everything.
The Congressional Budget Office calculates that with the younger, healthier people freed from mandates, they’ll simply stop buying health insurance. Older Americans, who already pay three times more for a healthcare policy than the young, will see their premiums rise by 10 percent.
The open market may very well be best for younger Americans, Republicans argue. But it puts a strain on the elderly living on fixed incomes.
“That’s the irony,” Jobert said. “The ones that cost the most, the ones that need the coverage the most, and can afford it the least, have to pay more because the ones that don’t need it won’t sign up.”