Health Inc.

Cost Of Medicare Buy-In Could Be Daunting

With all the fanfare about a potential political compromise on health overhaul that could let people ages 55 to 64 buy Medicare as their health coverage, you might be surprised to learn the idea has been kicking around for quite a while.

Medicare buy-in would need to be subsidized to attract many uninsured buyers. class= i i
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Medicare buy-in would need to be subsidized to attract many uninsured buyers. class=
iStockphoto.com

For three years in a row back in the early '90s, President Bill Clinton used his State of the Union address to exhort Congress to make Medicare available for purchase starting at 62.

A year ago Sen. Max Baucus of Montana talked up Medicare buy-in for those between 55 and 64 as a transitional step to nationwide insurance exchanges for individuals (see page 30 of the PDF) in his white paper on health overhaul.

But at what cost? Lo and behold, the analysts over at the Congressional Budget Office even took a look at what a buy-in would cost folks almost old enough to qualify for Medicare, those ages 62 to 64, and presumably the most expensive to insure. The price tag: $7,600 a year, including drug coverage, for individuals in 2011. (The details start on page 51 of the PDF.)

That's pretty steep compared with the recent average premium of $4,722 for 55- to 64-year-olds in the non-group market, according to a figure cited in a May report on Medicare buy-in by the nonpartisan Kaiser Family Foundation. About four million people in the age group are without insurance.

So no wonder that wonky what-ifs from wayback, including some from CBO and independent analysts, find that a subsidy would probably be needed to get many of the uninsured to buy in to Medicare, even if became an option. That's especially true for healthy folks who might decide to just risk it, if the cost of coverage were too high.

Without subsidies, a 2002 estimate found a Medicare buy-in would only cut a single percentage point from the proportion of uninsured adults ages 55 to 64, leaving 9 percent rather than 10 percent without coverage.

In those days, the uninsured rate was lower than today's 12 percent for that age group. At that time, adding a subsidy that gets more generous for those making less money pushed the share of uninsured adults down by half—to 5 percent, calculations showed.

The May report from Kaiser recaps the thinking on Medicare buy-in and broadens a bit the number of folks who might be candidates for the option. While folks ages 55 to 64 are much more likely to be insured than the younger set, such as those 19 to 34 years old, older folks are far more likely to have health issues that can make it difficult to get insurance at any price.

Over at the Health Affairs blog, a post in October by Jeffery Goldsmith, president of Health Futures, underscores the problem. "If one is thinking strategically, the most worrisome segment of the uninsured is the 11.3 million aged 45-64, who were the fastest growing age cohort of uncovered folk from 2007-2008," he writes. "It is one thing to be 22 and immortal and uncovered; it is quite another to be a 52 year old diabetic widow with hypertension, not disabled but thirteen years shy of Medicare and uncovered."

So he argues, let's drop the two-year waiting period for the newly disabled to enroll in Medicare and let the non-disabled buy Medicare after 55 at the program's estimated actuarial cost. Subsidies should be offered on a sliding scale for those who need them. You can read his post for more details.

In the end, he argues, Medicare buy-in would be quicker, less disruptive to the insurance market and more affordable than a public option. Seems like some folks on Capitol Hill came to the same conclusion.

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