Examining Approaches to Expand Medicare Eligibility: Key Design Options and Implications
National Academy of Social Insurance, March 2020
From the Executive Summary
Improving access to affordable, high-quality health coverage and care and constraining health care spending remain formidable policy challenges for the United States. In response, candidates, state and federal officeholders, academics, and a variety of stakeholders are presenting a wide range of proposals, including proposals to change Medicare eligibility. The Study Panel examined three approaches to changing Medicare eligibility and assessed how variants of these approaches could be designed to address key policy objectives, including expanding coverage, improving the affordability of access and care, and containing health care costs. The three approaches considered were:
- lowering the eligibility age by just a few years to age 62 or to as low as age 50
- extending Medicare coverage to all
- creating a Medicare buy-in under which some or all of the population or employers would be eligible to purchase Medicare or Medicare-like coverage
Proposals to adapt Medicare to extend coverage to new beneficiary populations present a significant set of technical and program design considerations. This report attempts to identify the options for changing Medicare eligibility, or creating a Medicare-like program, and to provide an assessment of the issues that would need to be addressed. Such considerations include:
- eligibility criteria
- benefit structure, including covered services and cost sharing
- premium structure and whether subsidies are available for newly eligible populations
- provider payment rates and any regulations concerning provider participation
- the roles of Medicare Advantage and private supplemental coverage
- financing mechanisms
- the rules regulating interactions with other public and private insurance
- rules governing the transition to a new or modified program
Summary of Findings
These three approaches address the goals of increasing coverage, improving affordability and access to care, and controlling system-wide health care costs, but each one presents different orders of magnitude. A Medicare-for-all program, the most ambitious, aims for near-universal coverage and would likely have the greatest impact on access and affordability for the entire population. Although Medicare-for-all could have the greatest impact of the three options on system-wide cost containment, the impact depends on the level of provider payment rates, prescription drug pricing, and level of administrative savings. It would also require the greatest amount of additional federal revenue and resources while potentially lowering net costs for some individuals or other payers.
Lowering the age of Medicare eligibility and offering a Medicare buy-in program would target specific portions of the population, and the impacts on policy goals are by design more limited. The impact of lowering the age of Medicare eligibility would be similar in direction to Medicare-for-all, but it would have a much smaller scope, even if the eligibility age were lowered to 50. The Study Panel’s analysis finds that the impact of a Medicare buy-in is most difficult to determine. It would be highly dependent on underlying design decisions and the complicated relationships that would be created with existing coverage options. The buy-in approach may have a limited impact on increasing overall coverage rates and controlling system-wide health care costs, but it would improve affordability and access to care for participating individuals. Although often suggested as a simple add-on to improve the ACA, in practice a Medicare buy-in would greatly increase the complexity of the current health care system.
Improving access to affordable, high-quality health coverage and care and constraining health care spending remain formidable policy challenges for the United States. When there is widespread public perception that coverage and access problems are significant enough to require action, a window for reform opens.
Evidence that the nation has reached such a point includes polls indicating that health care is a top issue for voters heading into the 2020 presidential election, as it was in the 2018 midterm elections. Significant problems in the health care system do not necessarily point to particular paths for reform, but they do create demand for change.
Because it would make use of an existing and popular coverage platform, extending Medicare to a broader population may seem to be a straightforward way to address the challenges of affordability, coverage, and cost containment. Although positive impacts on coverage and access to care would result from extending Medicare to more Americans, such a change also involves substantial challenges in program design and implementation. Policymakers need to acknowledge that Medicare is a complicated program, one that some believe is also in need of reform; that the health care sector is a large, profitable share of the U.S. economy; and that any significant change in Medicare eligibility is likely to help individuals who qualify for coverage while potentially disadvantaging other stakeholders.
Examining Approaches to Expand Medicare Eligibility: Key Design Options and Implications (full report, 180 pages):
By Don McCanne, M.D.
This is an important and timely paper. There is currently an overwhelming public consensus that we need to improve access to health care while making it affordable for all. Although there is considerable political rhetoric about protecting the private insurance industry, it is ever more clear that the private sector continues to drive up costs without meeting goals of providing access to everyone. Inevitably, discussion has centered around expansion of our revered Medicare program as a means of providing affordable health care to all.
How would we do that? Three major options include lowering the eligibility age for Medicare, establishing a Medicare buy-in or a Medicare-like public option, or extending Medicare to cover everyone. This report discusses the various design options and implications of each.
Students and advocates of the single payer model of Medicare for All will immediately recognize that the Medicare for Some models (lowering eligibility age, Medicare buy-in, public option) fall far short of the reform that we need. But this paper is still highly recommended because, by understanding the implications of the lesser models of Medicare expansion, you can explain to others why it is essential that we move forward with the uncompromised single payer model of an improved Medicare for All.
Even there, it is essential that this report be read critically. As an example, they present two models of extending Medicare coverage to all: one with and the other without including the option of private Medicare Advantage (MA) plans. Of course, including MA plans not only perpetuates the profound inefficiencies of a multi-payer system, it also perpetuates a model based on business principles with profits for passive investors rather than being dedicated solely to the altruistic mission of patient service.
Anyway, it’s a great report that will be useful to you in educating those who do not understand why perpetuating a system with private insurers is such a bad idea, though it likely will not be very helpful for lay audiences who do not have a foundation of knowledge about beneficial versus detrimental health policy.
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