Is the Future Now for a Lower Medicare Eligibility Age?

Some birthdays are more special than others.  Turning 16 means a drivers license is within reach and turning 18 grants the ability to cast a ballot.  For many Americans, turning 65 means they are finally eligible for Medicare coverage.  However, this milestone for turning 65 could soon change, as top Democrats weigh the possibility of lowering the eligibility age for Medicare.

On April 9, 2021, President Joe Biden reiterated his goal to lower the Medicare eligibility age to 60, a policy position he first laid out as a presidential candidate in 2020.  According to the President, a lower eligibility age would help Americans retire early and provide insurance coverage for those who are unemployed. 

Allowing Americans under 65 to enroll in Medicare isn’t exactly a new proposal; for over a decade, many Democrats have suggested a Medicare buy-in that would allow those five to 10 years below the current eligibility age to receive coverage by paying a premium.  Additionally, many of these previous proposals called for people not to enroll in Medicare itself, but rather in a Medicare-like plan operated by the federal government. 

The President’s proposal, however, would simply entail lowering the eligibility age, thereby allowing everyone within the expanded age group to enroll in Medicare.   

What About Bernie?

Long-time single-payer proponent Sen. Bernie Sanders (I-VT) has also been pushing for a lower Medicare age.  His plan is more far-reaching than Biden’s in that it would lower the eligibility age to 60 or 55 and provide dental and vision coverage. 

Cha-Ching

Lowering Medicare’s eligibility age could be pricey.   The Journal of the American Medical Association (JAMA) estimates that there are currently 20 million Americans aged 60-64 with commercial insurance, Medicaid, or no insurance coverage at all.  With an estimated average $5,000 per year in per-capital spending on this age group, JAMA projects an infusion of 20 million beneficiaries to Medicare could cost the program up to $100 billion per year. 

However, one could surmise that the price of lowering Medicare eligibility could be, at least in part, offset by potential savings to the government that could result from persons receiving subsidized coverage through an Affordable Care Act (ACA) plan switching to Medicare coverage. For instance, should persons 60-65 years who are enrolled an ACA plans shift into Medicare coverage, what impact would this have on risk pools and could premiums for ACA plans, overall, drop in price as a result? It will be interesting to see how the Congressional Budget Office (CBO) projects this budgetary impact. 

Medicare Insolvency?

Regardless of whether any shifts from ACA coverage to Medicare coverage could offset the price of the proposal, there remains questions as to what the impact may be on the Medicare Hospital Insurance Trust Fund, which is projected to reach insolvency by 2024

The growth in Medicare spending has been a concern for years, leading for some to call for the program’s eligibility age to be RAISED in order to save money.  According to a Congressional Budget Office report from 2011, raising the Medicare eligibility age to 67 would save the program $125 billion over a decade.  Since then, several prominent Republicans including then-2012 presidential candidate Mitt Romney have called for the program’s eligibility age to be raised by two years. 

Proponents of a higher eligibility age say the move would be a better targeting of the government’s resources, given the rise in the nation’s life expectancy since Medicare was first created and the fact that younger Medicare beneficiaries are less likely to have health problems than their older counterparts.  Others have said a higher eligibility age could keep more Americans in the workforce.  Meanwhile, opponents say raising eligibility age would simply shift costs from Medicare onto commercial insurers, Medicare, and individual Americans. 

Opposition

But lowering the age for Medicare eligibility is on the table now, not raising the age.  So where do health care industry stakeholders stand on lowering the Medicare age?  They aren’t happy.  Hospitals, for instance, may have the most to lose from a lower Medicare eligibility age because Medicare pays hospitals at a lower rate than commercial insurers.  Additionally, the addition millions of new Medicare beneficiaries would give Medicare considerably more bargaining power when setting prices with hospitals and other providers, including nursing homes and dialysis facilities. 

For insurers, there could be winners and losers, depending on the strength of any given company’s Medicare Advantage (MA) market share.  MA has been one of the fastest-growing lines of business for insurers, and with new Medicare beneficiaries disproportionately more likely to choose MA over traditional Medicare, a lower eligibility age could mean a windfall for insurers with MA plans.  However, for insurers who have focused more heavily on their group market business, they could see insureds shifting to MA as a loss, unless they are able to become competitive in MA markets.

What’s Next?

It is difficult, given Democrats’ small margins in the House and Senate, to ascertain a quick path to enactment of dropping the eligibility age to 60.  Some in the caucus will argue it is not enough, that a public option is what is needed.  Others may view this as an incremental win towards government-run healthcare.  However, with the prospect of using the budget reconciliation process again, at least one more time and possibly two, in play, as well as Speaker Nancy Pelosi (D-CA) recently signaling support for lowering the Medicare age, a more fleshed-out proposal that expands Medicare access and contains other Democratic health priorities has the potential become the party’s newest target for policy action.  

Despite Reintroduction, Medicare for All, Medicare-X Proposals Face Limited Odds

With control of the White House and both chambers of Congress, Democrats are newly emboldened to expand access to health care coverage.  A group of progressives in the House are making another attempt at Medicare for All, while moderates in the House and Senate want to expand coverage via a public option.  However, lack of Republican support for either proposal means both are likely doomed.

Medicare for All

On March 17, Reps. Pramila Jayapal (D-WA) and Debbie Dingell (D-MI) introduced the Medicare for All Act of 2021 (H.R. 1976).  The bill has so far attracted 109 co-sponsors, indicating the highest-ever level support in Congress for a national health insurance program.  While a Medicare for All bill has never advanced out of a congressional committee, advocates for single-payer feel the COVID-19 pandemic has laid bare the inefficiencies of the current health care system and made their case even stronger.  In a press release, Rep. Jayapal touted Medicare for All as a solution for the millions of Americans who lost employer-sponsored coverage because of the pandemic.    

In addition to being a total non-starter with Republicans, Medicare for All faces two major obstacles.  One is resistance from health care stakeholders, who have long thrown cold water on single-payer proposals.  The Partnership for America’s Health Care Future, a coalition of insurer and provider organizations, issued a recent statement saying Medicare for All is unaffordable and would lead to lower quality.  Additionally, the US Chamber of Commerce said in press release that Medicare for All would reduce access to providers and hospitals.

The second major obstacle comes from within the Democratic party itself.  President Biden has clearly stated his preference for expanding access to coverage through a public health insurance option, one that moderate and centrist members of the party share.  While Biden has gradually moved leftward over the course of his political career, it is extremely unlikely he would champion a health care proposal that remains divisive among members of his own party. 

Medicare X

Closer to the President’s ideological preferences for expanding coverage is the Medicare X Choice Act of 2021 (S. 386/H.R. 1227).  First introduced by Sens. Michael Bennet (D-CO) and Tim Kaine (D-VA) in 2017, this proposal would allow all Americans to purchase a public health insurance plan based on the Medicare program that would reimburse providers at the same rate Medicare currently does and allows patients to access providers that accept Medicare.  Supporters of Medicare X tout it as a more realistic proposal to achieve universal coverage that would be less disruptive to the health care system.  Additionally, a January 2020 poll from the Kaiser Family Foundation found a public option-based proposal is more favorable to a greater number of Democrats and Independents than Medicare for All.

The fact that Medicare X/a public option enjoys higher favorability than Medicare for All does not necessarily improve its odds of passage.  Medicare X is similarly unpopular with Republicans and given the party’s razor-thin control of the Senate, Democrats would likely have to use budget reconciliation to advance any kind of public option proposal.  While reconciliation was used to pass the Affordable Care Act (ACA) in 2010, it remains unclear if a proposal like Medicare X would meet the strict budgetary criteria required to be considered under budget reconciliation.  Furthermore, Congress is limited to the number of times it can use budget reconciliation in any given year, and Democratic leadership have yet to make any prognostications about what proposals it could consider under budget reconciliation in the future. 

Implications

While Medicare for All and Medicare X are unlikely to become law anytime soon, a key implication of both proposals is their potential to hasten divisions between progressive and moderate Democrats.  Since the start of the Biden Administration, both wings of the party have largely set aside their differences to advance key components of the President’s agenda, including cabinet nominations and a sweeping $1.9 trillion COVID-19 relief package.  While the House, and some argue the Democratic Party, have moved more to the left – it remains clear that moderate Democrats in the Senate maintain a high level of power over the fate of any legislation in the upper chamber.  Disagreements over health care proposals have the potential to disrupt broader legislative goals from the White House, such as immigration, infrastructure, or tax reform.