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Medicare Buy-In Lowers Costs for Some, Raises Others’ Costs

Pills and dollars

(Images Money, Flickr)

18 Nov. 2019. A plan allowing Americans to opt into Medicare at age 50 would lower insurance premiums for those age 50 to 64, but raise premiums for some younger people. These conclusions and others are contained in a report by Rand Corporation in Santa Monica, California, published on the public policy research organization’s web site.

A team led by Rand Corp. economist Christine Eibner investigated a proposal to lower the eligibility for Medicare to age 50, from the current minimum age of 65, looking specifically at its effects on insurance coverage, individual-market insurance premiums, and federal health costs. The plan would allow for individuals at age 50 to voluntarily buy into Medicare instead of other health insurance plans, and enjoy the same benefits and limitations as older Americans already in Medicare. This Medicare buy-in proposal is less expansive than tax-supported single-payer plans known as Medicare-for-all offered by some candidates for president.

Eibner and colleagues devised mathematical models to simulate the effects of basic Medicare buy-in, and seven other design scenarios. The plans all assume health insurance tax credits provided under the Affordable Care Act would continue and be available for Medicare buy-in among people age 50 to 64. The cost impacts were calculated on premiums charged for health insurance plans purchased by individuals on the exchanges created under the Affordable Care Act, or ACA.

The results show expanding Medicare would attract between 2.8 and 7 million Americans age 50 to 64 as participants, depending on the design of the program, with the basic buy-in scheme enrolling some 6 million individuals. Under most scenarios, buying into Medicare would cost Americans age 50 to 64 about $10,000 per year. People in this age group already buying health insurance on the ACA individual plan exchanges, would save from 16 to 35 percent in out-of-pocket costs by opting into Medicare.

“Our findings suggest that Medicare buy-in could offer significantly more-affordable health care coverage to older adults,” says Eibner in a Rand Corp. statement, “while potentially leading to higher premiums for the pool of people remaining on the individual market.” The data show younger people on the individual exchanges would likely pay higher premiums when Medicare buy-in is enacted.

The researchers say this effect is due to younger people on the individual exchanges being less healthy overall than other people their age. When people age 50 to 64 on the individual exchanges buy into Medicare, it would leave behind this younger group, less healthy than their counterparts covered by insurance elsewhere. The result is higher premiums for the remaining individual exchange participants.

The team points out that premiums for the 246 million people in the U.S. under the age of 65, covered by other forms of health insurance would be largely unaffected by any of the Medicare buy-in scenarios.

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