Should "Early Medicare" Be an Option?

I know a number of people over the age of 55 who, if given the chance, would buy into Medicare rather than continue working just so they can stay on their employer's health plan, or even just because they're sick of private insurance.  Should they be allowed to buy into Medicare early?

Merrill Goozer asked the question on his blog yesterday: “While continuing to fight for a public plan alternative, progressives might consider throwing an additional option on the table: opening up Medicare to anyone 55 and over. Why not work on making the public plan we already have available to more people and simultaneously reform Medicare to deliver more effective and cost-effective care?” As an incremental step to full coverage, it’s a tempting idea. But in terms of political reality, it seems like it would be the exact same fight we’re having now, but with far less gain at the end of it.

The answer of why someone aged 55 to 64 would want to is obvious. We already know that when it comes to the individual market, it’s a jungle out there. That’s even more true for those approaching but not yet at retirement age, who might be induced to sticking with their job not because they need the salary so much as they need the benefits. As reported by the Philadelphia Inquirer and Kaiser Health News, 17% to 29% of people age 50 to 64 applying for insurance were rejected – a rate 2 to 3 times that of people in their 30s. And lest you think those stats are exaggerated, keep in mind they come from AHIP itself. The obvious reason: exclusions based on pre-existing conditions. When you get past 55, the chances that you have a chronic condition or have already lived through a major health episode (apparently suggestive that you might again) are pretty high. A young 20-something might well only need one doctor’s visit a year, but someone entering their 60s is likely to just simply need more health care. Even worse, without community ratings, the costs of individual insurance plans are much higher the older you are. The Inquirer reports premiums of “5,090 for 60 to 64. The premiums were $1,877 for those 30 to 34.”

Combine these factors, and it’s no wonder that 4 million people in that pre-Medicare age range are uninsured.

Sen. Baucus’ white paper on health care proposes a solution: let them buy into Medicare early. Sounds good, in theory. After all, Medicare is proven coverage, they’ll be entering it soon enough anyway, let them pay a premium and get care early if they have no other option.  Here’s problem number one: without subsidies, this is a prohibitively expensive solution for most people. The Congressional Budget Office scored this proposal and, to be budget-neutral (not cost Medicare anymore), the premium would have to be $7,600 for a plan with dependents. It’s hard to see that $633 out of pocket each month counts as “affordable.” If we don’t want participants to pay full premiums, we have to raise more money for the full cost of Medicare or for subsidies, and there’s nothing in Baucus’ plan to do that. Number two: how is this in any way an easier political fight? Any expansion of public coverage programs engenders the same response, whether it’s SCHIP, HR 676, Pete Stark’s Americare, or the public plan (“Plan USA”): government is “crowding out” private insurance, in that not only would early Medicare cover the uninsured, but those who just barely could afford private insurance (I think of that more as an insurance push than a government pull, but you’ve heard the arguments); you’d hear renewed bellyaching on Medicare provider rates; you’d hear all about bureaucrats disrupting the doctor-patient relationship – as always, a bogus point given that current Medicare patients don’t feel anywhere near as restricted as those in private insurance, where a corporate bureaucrat disrupts the doctor-patient relationship all the time. Finally, as we learned yesterday, Karen Ignagni and the folks from AHIP will argue that a public expansion of Medicare won’t be necessary if there’s community rating and guaranteed issue (no pre-existing conditions) combined with government subsidies. In this case, they’re could right – guaranteed issue with subsidies may well be a better deal than full-price early Medicare.

To be clear, Baucus’ plan would only allow Medicare buy-in as a stop-gap measure while setting up the infrastructure for the rest of his plan. But if we’re going to have the fight, I’d rather have the sturm and drang be to the benefit of the uninsured from 0-65, and not just 55-64.

(Photo credit:  thinkpanama on Flickr.)