Congressional Democrats appear to have found common ground in a proposal that has animated both their progressive and moderate factions: lowering the Medicare eligibility age from 65 to 60—or even lower.
Supporters want to help fund the benefits expansion with $456 billion that Medicare could save over 10 years through President
After the massive loss of jobs and employer-based health coverage due to Covid-19, Democrats say public support for their plan is strong. A recent Gallup poll found roughly 46 million Americans couldn’t pay for quality health care if they needed it. And even before the pandemic struck, 77% of Americans, including 69% of Republicans, favored letting adults ages 50 to 64 buy into the Medicare program, according to a January 2019 poll by the Kaiser Family Foundation.
Getting their policy goals accomplished, however, will still prove to be a heavy political lift.
Congressional Republicans have railed against expanding federal health-care programs and have shown no signs of budging. The powerful pharmaceutical lobby opposes Medicare negotiating its own drug prices. And “simply lowering Medicare’s eligibility age does not solve the core problem of affordability and would put at risk the existing coverage so many Americans rely upon,” David Allen, a spokesman for America’s Health Insurance Plans, said in a statement.
In addition, adding new Medicare beneficiaries would shift coverage costs from private employers to the federal budget, which would have implications for taxpayers. Even without expanded eligibility, Medicare is already on course to nearly double its annual spending to $1.5 trillion by 2029 as more aging baby boomers enroll, the Congressional Budget Office projects.
New research from the Kaiser Family Foundation and the Peterson Center on Healthcare found the “shift from employer coverage to Medicare could exacerbate the financial challenges facing Medicare’s Hospital Insurance Trust Fund, without safeguards to prevent this. In his campaign, President Biden proposed to finance the expansion through general revenues, rather than the Trust Fund.”
‘What’s the Goal?’
Those headwinds aside, it’s unclear what a lower Medicare eligibility age is meant to achieve for the older, pre-retirement population it would target, said Chris Sloan, a principal at Avalere Health.
“A question that needs to be answered as they start drafting this policy is ‘what’s the goal?’” Sloan said. “Is this a proposal to reduce the number of uninsured? Is it a proposal to just give people another insurance option? Is it a proposal to try to reduce costs for these people?”
Purpose is important because the lower the program eligibility age goes, the more changes it will require, Sloan said.
Last week, Democratic Sens.
“Lowering the Medicare eligibility age to 60 could expand Medicare coverage to 23 million people, including nearly 2 million uninsured people, while lowering it to 55 could give over 42 million people access to the program, and lowering it to 50 could cover 63 million Americans,” Sanders and the 16 Democratic senators wrote in a letter to Biden.
In 2020, Avalere estimated that Biden’s campaign proposal to extend Medicare eligibility to people 60 and older would add 23 million new beneficiaries, including: 13.4 million individuals currently enrolled in job-based coverage; 3.8 million from Medicaid; 3.2 million from the individual market; 1.7 million uninsured, and 600,000 from other federal programs like TRICARE and Veterans Affairs.
A lower eligibility age is the simplest way to expand coverage because it builds on the current system and targets the nonelderly population with the highest health-care costs, said Tricia Neuman, a KFF senior vice president and executive director of the foundation’s Program on Medicare Policy.
“It’s conceivable that total health-care costs would actually be lower,” for the newly Medicare-eligible 60- to 64-year-olds “under this approach even if federal spending goes up,” Neuman said. “That would be because Medicare pays providers less than what private insurers pay. So the per-person spending could be lower under Medicare than it would be under private insurance, even though costs could rise for the federal budget.”
Lowering Drug Prices
As Democrats look to lower prescription drug prices, Medicare expansion will likely take a backseat, said Gail Wilensky, an economist and senior fellow at Project Hope.
“My sense is none of them think this is something that’s likely to happen right away,” Wilensky said of Democrats. “There’s much more focus on drug prices as the next step because that’s a much easier sell to the American public than talking about a change to the Medicare program.”
A former Medicare administrator under President
“Generally speaking, Medicare has required, at least within certain categories, all of the drugs within classes. And if you do that, it makes it very hard to negotiate” Wilensky said. “It really is that threat of exclusion that gives you the ultimate tool to negotiate.”
For the Centers for Medicare & Medicaid Services and the Department of Health and Human Services to “get serious about this, they both have to get skilled at negotiating prices, which is not historically what CMS has done,” Wilensky said. “Basically they have put the prices out there and physicians and hospitals can take it or leave it. That’s not usually what people mean by negotiating.”