Congressional Republicans seem once again stymied in their efforts to “repeal and replace Obamacare.” So here is a partial solution that can be a winner for both political parties, the insurance industry, and consumers: Allow people 55-64 to buy into Medicare. And enhance the deal by letting Medicare Advantage plans offer some long-term supports and services, such as personal care, as part of their benefit package.
The idea of a Medicare buy-in has been around for years. It was proposed by President Bill Clinton and endorsed again in the recent presidential campaign by Hillary Clinton. About now, you are thinking that the Clinton pedigree is a death sentence in a Republican-controlled government.
But hear me out: This idea would not only attract Democrats, it could also win support from Republicans. And it would help President Trump keep his campaign promise of expanding coverage. Here’s why:
Congressional Republicans want to price many people in their 50s and 60s out of the individual market. Because they tend to be sicker than younger people, they drive up insurance costs for all participants including those healthy young adults who have been so reluctant to buy coverage.
That’s why the GOP’s initial replacement plan would have allowed insurance companies to increase premiums for those over 50 but not eligible for Medicare. The Congressional Budget Office estimated that under the GOP’s first try at repealing the Affordable Care Act, a 64-year-old making $26,500 would pay $13,000 more than under the ACA. In reality, that consumer likely would go without insurance until she became eligible for Medicare at age 65.
The GOP’s latest plan would have the same result, though the tools would be different. It would give states the right to allow insurers to limit benefits and charge extra for those with pre-existing conditions, including many people in their 50s and 60s.
Before the ACA became law in 2010, about 4 million people between age 55-64, or about 12 percent, were uninsured, according to a 2009 study by the Kaiser Family Foundation. Nearly one-quarter of them were in fair or poor health, compared to 16 percent of those 35-54.
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. The latest GOP bill would return to those pre-ACA days, at least in some states. And if insurance companies are allowed to deny coverage to those with pre-existing conditions, either directly or by pricing the policies so they are unaffordable, they will.
But then what? Would the GOP be willing to leave 55-64 year-olds with no insurance? That’s bad policy, and perfectly awful politics.
The Medicare buy-in could help solve the problem. It would get many people with pre-existing conditions out of the individual market and help achieve what appears to be a key GOP goal—reducing premiums for others. But it also would create what might be the only viable alternative for people in their 50s and 60s who are priced out of the new individual market. The GOP alternative, state-run high-risk pools, has been tried and failed.
The buy-in could also lower overall Medicare premiums. That’s because while those in their 50s and early 60s are sicker than the overall under 65 population, they are on average healthier than current Medicare beneficiaries. Thus the Medicare risk would be spread among a population that is healthier than today.
A buy-in would also likely expand the market for Medicare Advantage plans, something else Republican would like. Already, about one-third of Medicare enrollees are in MA plans, and younger seniors are more likely to participate than older beneficiaries (not counting those younger than 65 with disabilities). Encouraging participation among those 55-64 might also create a new market for people looking to purchase an MA plan that offers some long-term supports. Currently, MA plans are barred from offering most non-medical services. But Congress could change that.
Conservative critics of the buy-in say all it would do is expand the Medicare entitlement and shift costs. They are right, but until we get a handle on medical costs, which neither party wants to do, insurance reform is always going to be about cost shifting. And Medicare delivers care more efficiently than private insurance.
Policymakers would have to answer dozens of questions before a Medicare buy-in becomes law. One key: Would premiums be subsidized, and by how much? My Urban Institute colleagues Linda Blumberg and John Holahan described these questions here.
But if Republicans want to drive those 55-64 out of the individual insurance market to hold down premiums for others, a Medicare buy-in may be the only way they can get there.
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