Medicare buy-in: The right move for employers?
Would lowering the age of Medicare eligibility correlate to health care savings for employers?
The current pandemic has brought to light many inadequacies with our health care system. Many of the ideas that gained popularity during the Democratic primaries, including Medicare for All, Medicare for more and a public option are all seeing renewed interest.
“COVID closed many workplaces and dramatically slowed economic activity, which has shown the perils of employer-tied health benefits,” Paul Fronstin, director of the Health Research and Education Program for the Employee Benefits Research Institute (EBRI) said in a recent webinar. “The political landscape is more receptive to a shift toward a health care market that has a public option.”
Related: 10 states paying the most for employer-sponsored health care premiums
Health policy leaders joined Fronstin in a panel to drill down on one particular reform that has been gaining popularity: lowering the age of Medicare eligibility.
Sharing the findings of his recent paper, “Money can’t buy me love, but it might buy me Medicare,” EBRI research associate Jake Spiegel laid out what lowering the age of Medicare to 50, 55 or even 60 would mean for employers. At best, they would be looking at savings of $133 billion to $327 billion.
Unfortunately, that’s only if all of an employer’s eligible “high spender” individuals switch, which probably won’t happen. It’s much more likely that healthier employees, who represent just a marginal amount of health care costs, will opt for Medicare plans instead, Spiegel said.
“Who switches is the crux of the issue,” he explained. That depends on how the features of the Medicare plan compare to the employer plan. His research team ran different models adjusting for higher and lower premiums, deductibles, out-of-pocket costs and more. The unsurprising conclusion? “When you make the employer-sponsored plan more generous, fewer people end up switching to Medicare buy-in.”
In fact, according to Spiegel’s analysis (as well as others), a Medicare buy-in plan would remove healthy members from the employer plan, driving up the cost of premiums for all remaining members. “We’re likely to see the healthy migrate,” agreed Katie W. Mahoney, vice president of health policy for the U.S. Chamber of Commerce. “The sick will stay and premiums will increase. You’ll have more people covered in a program that under-reimburses providers.”
Another concern for Mahoney is what that means for employer-sponsored health care in the future: some may be tempted to make their benefits less generous and less affordable to discourage Medicare-eligible employees from taking advantage of them.
There are other issues at play that would factor into the impact of a Medicare buy-in program, including whether it would come with an additional cost to employers as well as the availability of Medicare Advantage programs.
More importantly, expanded Medicare simply doesn’t address the underlying issues in our health care system, said Bill Kramer, executive director of health policy with the Pacific Business Group on Health. “The primary effect of Medicare buy-in is really to shift who is paying for coverage. There’s little in these plans that would provide a stronger incentive for providers to be more efficient, reduce unnecessary services or be proactive in reducing the cost of care.
“Going forward, this is going to be a big policy debate in health care,” he added. “We need to come together to find a way to tackle the cost problem.”
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