The 2016 presidential race has put an incredible amount of focus on what to do with the Affordable Care Act (ACA). Despite discrepancies on costs and the stability of insurance markets, the health reform law has successfully lowered the uninsured rate. According to the Kaiser Family Foundation , most Americans believe modifications to the ACA over time are necessary and would be better than repealing the law altogether.
Hillary Clinton has been involved in the development and roll out of the ACA law from the very beginning, insisting that new processes take time and adjustments will continue to be made in problem areas. One change she would like to introduce is the “public option”. Clinton is not a fan of Senator Bernie Sander’s single-payer health system, Medicare for All, but the closer we get to the election, the more she moves to the left on health care. Recently she made a significant compromise in Sander’s direction, suggesting she would like to give people over 50 an option to buy into the Medicare program up to 15 years earlier than the current universal eligibility at age 65.
While many people are still trying to understand how Obamacare works, they are more familiar with the Medicare Program. Clinton proposed giving people age 50 or 55 and up, who are not currently eligible for Medicare, the option of buying into a well-known program. This proposal is already being referred to as “Medicare for More”. There are not any specifics being released, but the hope is that it will align with current health care plans, premiums, and subsidies.
Medicare and Public Option
Medicare was designed to cover the health care costs primarily for those in retirement at age 65 and up. The premiums are collected through social security contributions during each American’s main working years through payroll deductions or estimated payments.
Medicare coverage provides the necessary benefits for people in generally fair health. It protects them in the event they experience a more catastrophic illness or injury using Medicare Part A and delivers routine health care services and benefits through Part B. Any gaps in coverage due to the high coinsurance, deductibles, and other out-of-pocket costs for more chronic health care needs can be offset with Medicare Supplement plans purchased by private insurance companies.
Medicare also offers a combination of Parts A and B referred to as Medicare Advantage or Part C plans as well as the choice to add a prescription plan, Part D, which can be purchased separately as well.
Giving people over 50 or 55 the option to purchase Medicare plans before the age 65 eligibility could be a great addition to the Clinton health plan. The current Affordable Care Act legislation can redistribute costs through Medicare expansion. It could cover more uninsured people and give those in a higher health risk pool another chance to compare pricing and benefits.
There are 63 million Americans within the age range of 50 to 64 years. About 61 percent of those are already covered through their employer and roughly 13 million – or 11 percent – of those are either uninsured or have purchased private insurance on or off the Obamacare marketplaces. This last percentage currently does not qualify for Medicaid and would be the population eligible for Clinton’s “Medicare for More” option.
The growing concern for this sector is the loss of their employer or group health insurance. When a spouse becomes eligible for Medicare but they are not, they lose their jobs due to company layoffs or closings, and retiree health coverage is unexpectedly dropped, nearly half of these age 50 to 64 unemployed and displaced workers remain uninsured.
Americans still in their main working years are a large demographic group already drawn to the exchange market, and as of 2016, that means more than 26 percent of current Obamacare enrollees age 50 and over could voluntarily pay to join Medicare and be given the opportunity to obtain the same government coverage they would eventually be offered at age 65.
This idea is not entirely new. It has been discussed since the passing of the original Medicare legislation with intentions to incrementally expand the program over time. Former President, Bill Clinton, entertained it in a proposal in 1998. The idea was considered again when the Affordable Care Act was being debated in Congress, but it was ultimately removed from the law.
Hillary looks at this expansion along with other health policy changes to improve the Affordable Care Act such as expanding financial protections to lower high health care prices, expanding subsidies for middle-income individuals, and lowering the cost of prescription drugs. However, Medicare for More, like everything, has pros and cons to consider, according to reports by Avalere.
To the Positive
- Medicare has always been a great program for healthier people who do not use healthcare services often and could be the best low-cost marketplace alternative for generally fit adults between 50 and 65.
- It uses the broadest possible networks of doctors, providers, and coverage options, allowing for continuity of service and benefits from age 50 until life ends.
- Studies have not proven Medicare to have any serious effects on improved health for people who enroll in the program at age 65 after being uninsured. Enrolling at age 50 for health services could allow more time for positive results.
- Enrollees in Medicare are protected against medical debts, and as health issues increase with age, affordable premiums could provide much more help.
- If the Medicare risk pool were infused with younger, healthier individuals, it could bring prices down for everyone. If the subsidies are applied to Medicare plans the same way as marketplace subsidies, premiums and savings from these new enrollees could cut back net costs for the entire Medicare program.
- By removing over-50 adults from Obamacare marketplace risk pools, it could reduce costs for insurance for younger adults purchasing individual plans.
The Affordable Care Act prevents discrimination for people over age 55 meaning they must be offered coverage, however, the premiums are up to three times higher than a younger adult to cover the expected health risks. This risk pool could be more evenly distributed.
Medicare for More might lessen the burden of the most expensive health care population whose medical costs keep rising toward the end of life. The savings could affect prices of services, visits, drugs, surgery, and hospital stays for both Medicare and marketplace enrollees.
Moving these older adults into the Medicare risk pool could reduce costs to run the government program and could lower insurance costs for younger people left in the marketplace plans, but it would definitely depend on how the over-50 expansion is structured.
Fee-for-service Medicare, for those over 65, usually offers broader access to doctors than other plans, however, the costs to the over-50 beneficiaries may be higher than other options privately purchased or bought through federal or state marketplaces for the following reasons.
To the Negative
- Premiums and potential subsidies have not been defined and there is a chance that Medicare program plans offered could be too costly for low-income uninsured adults above 50 who are ineligible for Medicaid because of state policies.
- Unlike private plans, Medicare has quite a few cost disadvantages, such as the 20 percent cost-sharing requirement, out-of-pocket expenses have no capped limit, and drug benefits are less substantial.
- It has not been discussed whether people under 65 could qualify for the Medicare Advantage plans that help with coverage gaps. Less healthy elderly individuals have trouble covering costs due to coverage limits, and Medicare may not be a financial option for older adults with serious chronic illnesses. Medium-cost marketplace plans could be the better answer.
- Clinton did not establish whether lower-income enrollees choosing Medicare would receive subsidies to pay their premiums equivalent to those given when buying private plans on the marketplaces. Without subsidies, only the wealthy might afford these Medicare options. According to AARP, the Congressional Budget Office (CBO) study of 2008 estimated the cost of a Medicare program option for those age 62 to 64 would cost around $7,600 a person in 2011.
- The wider range of physicians and services that Medicare offers may be a great benefit, but the tradeoff is more holes in coverage. Traditional Medicare would have different benefits and debt protections than private plans offered to the 50 to 65 population.
The public option is not a bad idea, but it is more complex than just offering the program to a larger age group and its success would depend on the details. Medicare may be a more familiar program to Americans than Obamacare, but it is not certain Medicare coverage would be better for everyone between age 50 and 65.
Currently, traditional Medicare has a broader network and lower deductibles than unsubsidized exchange products. However, because of the Medicare fee-for-service structure, it may cause the over-50 program options to have higher costs and more coverage limitations than marketplace exchange plans based on the frequency or the type of health issues involved.
Maximum out-of-pocket costs are the biggest difference between Medicare and private plans. Employer and exchange plans both include an annual cap on out-of-pocket costs ($6,850 for an individual in 2016); Medicare does not. Enrollees with greater health care needs could pay more out-of-pocket with Medicare plans than with group or exchange coverage.
Medicare charges beneficiaries a 20 percent coinsurance for all Part B services, including physician visits, lab tests, hospital-administered drugs, and durable medical equipment. Medicare Supplement policies reduce these costs, but at an added monthly premium expense.
Drug benefits are substantially less under Medicare. Drug coverage varies by plan and formulary tiers and Medicare Part D prescription plans are more limited than the average silver exchange plan. Formularies for exchange plans cover about 85 percent of all drugs, while Medicare Part D plans cover roughly 70 percent. Depending on the enrollee’s prescription needs, Medicare may not be an option.
If the Clinton plan allowed individuals over 50 to also enroll in Medicare Advantage, costs would vary more from traditional Medicare, but this has not been determined to be part of the option yet.
Medicare for More
The public option is a compromise between the current Affordable Care Act law and a single-payer system in which the government covers all costs. It gives individuals over age 50 the opportunity to choose between the free enterprise of privately purchased coverage both inside and outside the marketplaces or buying a plan that is run by a government program that has been in existence for decades.
Expanding Medicare plans to people who face increasing health challenges makes sense and allows them continuity and stability in a plan that will continue after age 65, but it will only help the wealthy if subsidies are not applied.
This progressive move could be a positive step for Clinton in a general election against Trump who feels the Affordable Care Act needs to be repealed and replaced. Changes are being discussed regarding the ailing Medicare program on both sides. The benefits of the public option to consumers over 50 would depend on their specific situation. It appears, in general, those in better health may get a great deal through Medicare, while those who are not may want to stick with their private coverage to save on out-of-pocket costs and prescription drugs. It is Clinton’s hope that the policy will result in further reducing the uninsured population.
Sources and Links:
President’s Plan to Strengthen and Modernize Medicare for the 21st Century, https://clinton2.nara.gov/WH/New/html/Medicare/2-4.html
A Medicare Buy-In Program, http://assets.aarp.org/rgcenter/health/i29_buyin.pdf