WASHINGTON — Sherrod Brown of Ohio and seven fellow United States senators have revived talk of opening Medicare, the federal health insurance program for people 65 and older, for the pre-retiree set.
What if, these Democrats ask, you could buy into the program starting at age 55? This could solve a number of problems for that age group, and even ease some of the financial pressures in the private market that push up premiums for younger people, they say.
How would this work?
Brown’s office said the bill, introduced last week, would direct the U.S. Department of Health and Human Services to work out details. But this is not a start-from-scratch proposal, and it’s not, Brown says, an entry route to total government-run health care or “Medicare for All,” as Sen. Bernie Sanders of Vermont wants. The idea of a Medicare buy-in kicked around during Bill Clinton’s presidency and again when Hillary Clinton ran for president last year.
Here, based on studies, analyses and recommendations over a number of years, are some of the pros and cons.
Peace of mind:
Before the Affordable Care Act, or Obamacare, kicked in, people in this age cohort faced the highest rejection rate from health insurers if they bought their coverage in the open market.
“One in five of those 55-59 and 29 percent of those 60-64 were denied coverage for health reasons in the pre-ACA individual insurance market,” Howard Gleckman, a retirement-issues expert and author at the Urban Institute, a Washington think tank, wrote in Forbes recently.
They also faced an unsettling set of life circumstances: the chance that if they lost their jobs and therefore their employer-provided insurance, their ages could make it harder to find another job.
They need health insurance. This could give them certainty and peace of mind.
“This is a simple solution for folks who are 55 and can’t get health care through work, or those who are ready to retire but aren’t yet eligible for Medicare,” Brown said.
One thing to consider, though: The ACA already makes sure they can get insurance and provides subsidies if their incomes are low enough.
Helping the ACA:
Brown and colleagues don’t want to scrap the ACA. They see a Medicare buy-in as a way to improve the ACA.
They say if a number of people aged 55 and above paid premiums to join Medicare, it would remove them from the ACA pool of participants. Depending on the heath of these new Medicare enrollees, this could leave the ACA with a relatively younger and less risky pool of participants. That could mean the remaining participants — those in their 20s, 30s and 40s — could see lower premiums and insurers would face less risk of big insurance claims.
It’s elementary: The younger and healthier people are, the cheaper their health insurance should be. They don’t get sick and aren’t hospitalized as often.
Granted, if this were voluntary, as the senators say it would be, some in the older group still could buy private policies through the ACA marketplace, where many could still get subsidies to offset their premiums. But if there were fewer of them than before, their premiums, too, could shrink, because they wouldn’t weigh so heavily on the overall, infant-to-age-65 risk pool.
And if a Medicare buy-in program offered similar subsidies to the ACA’s, that too could boost enrollment in Medicare and reduce coverage in the ACA’s private market.
The older someone is, the more likely he or she is to need health care.
Theoretically, adding a relatively younger group to Medicare’s membership — the spritely 55-to-64 set — could cushion Medicare’s finances by diluting the risk pool. In a 2009 paper on the possibilities, the National Center for Policy Analysis said 57 percent of people ages 55 to 64 who buy their own insurance report excellent or very good health, and the same went for people in that age group who get coverage from their employers. Another 13 to 14 percent reported poor health.
Contrast that with this statistic from the Kaiser Family Foundation: In 2011, 27 percent of all Medicare beneficiaries were in fair or poor health.
This could matter because Medicare is under threat of running out of money to pay all of its hospital costs after the year 2029, after which it would have enough to cover 88 percent. Broadening enrollment with healthier people could help shore up Medicare’s finances, although that would depend upon how the expanded enrollment was paid for.
Medicare gets its revenue from payroll taxes, premiums for retirees, extra taxes on high earners and general government funds. Moreover, Medicare actually consists of separate programs for hospital insurance, doctor visits and prescription drugs . Then there’s Medicare Advantage, which allows seniors to enroll in private health plans that often cover additional services such as dental and vision care.
What portions, if not all of them, would a buy-in cover? How would premiums be set, and what about ACA-style subsides?
That is all to be determined. But Brown says his bill would provide coverage in the doctor, hospital and prescription programs.
Moving the costs around:
Medicare pays less money than private insurance for doctor’s visits and hospital stays. Relatively recent analyses have shown Medicare pays doctors 80 percent of private payment rates, and when it comes to hospital stays, private rates are about 75 percent greater than Medicare’s, according to an Urban Institute study in September on the nuances of a possible Medicare buy-in.
From a taxpayer’s perspective, this should be good news.
It is not great from a medical provider’s viewpoint.
Hospitals already note they took Medicare cuts through the ACA, which was based on the premise that health providers would see more paying patients as more people gained health insurance, and that they’d see fewer uncompensated care visits from the uninsured.
If a bigger share of the population went on Medicare and the payment structure didn’t change, hospitals and doctors could chafe as per-patient revenue fell.
So might private insurers, if this meant hospitals and doctors shifted their losses to make the private market pay.
“It’s like saying, ‘Let’s move this pothole over to another place where you’re not driving and someone else will run into it,’” Tom Miller, a resident fellow at the American Enterprise Institute, told NPR when it examined Hillary Clinton’s idea in 2016. It just moves the cost around.
A lot to work out:
The Urban Institute analysis in September, by health policy analysts Linda J. Blumberg and John Holahan, raised a lot of questions, some of them mentioned already. But one more: Medicare has no upward cap on out-of-pocket expenses. The ACA does.
Many seniors deal with this by buying Medigap policies, or insurance policies that pick up costs that Medicare doesn’t cover. Would 55-year-olds be able to buy those, too, and how would that affect their premiums and subsidies?
What about the ACA insurers? Would they cheer or curse the loss of pre-retirement customers? Would the loss affect their willingness to stay in the market?
Again, it’s all to be determined. AARP said last week it is still reviewing the Senate proposal, but in 2009 it found the idea intriguing — but with a mix of advantages and concerns.
The proposal from Brown — and his colleagues, Democratic Sens. Debbie Stabenow of Michigan, Tammy Baldwin of Wisconsin, Sheldon Whitehouse of Rhode Island, Patrick Leahy of Vermont, Jeff Merkley of Oregon, Jack Reed of Rhode Island and Al Franken of Minnesota — is a fresh starting point.
Congressional conservatives bristle already, however, at the thought of an expansive government, and given their status in the House and Senate right now, there is no chance the “Medicare at 55 Act” will pass soon. Social legislation can take years, anyway.
Nevertheless, if the idea appeals to you or offends you, sign in and share your views in the comments.