The NY Times reported that Secretary Clinton is on board with a Medicare buy-in proposal, and a valued commenter asked a good question via e-mail:
whats your guess on the age they pick, 62? Maybe an even 60 ?
As for the age proposed for a Medicare buy-in, I think there are a couple of things in play here. First, is this an offer for just people who don’t have employer sponsored coverage or is it an open buy-in for everyone? I would prefer an open buy-in but that is technically much harder to do on a risk adjustment basis as Giant Evil MegaCorp would love to dump its cancer patients and keep its senior triathletes on their own coverage. So let’s assume the first step is just for people on the individual market where their options are a Qualified Health Plan (QHP) or nothing. Nothing is being chosen by some people because a QHP is a combination of too expensive even after subsidy and not valuable enough in benefit design (too high deductible/co-insurance/co-pays etc) . Medicare buy-in is an attempt to lower the premium cost of a QHP because Medicare pays less than most Exchange plans (some of the Medicaid narrow network based plans might pay providers less).
That make sense?
So the question is what age does it make sense to allow buy-in to Medicare? Ideally from a cost control perspective Age 21. That is not going to happen. At this point it becomes a political decision. 55 is what Rep. Weiner offered and liberals were on board with in 2009 when Lieberman quashed that. I am not a political genius. I would open my bid at age 55 and let “fiscal” hawk Democrats dial the age up by a couple of years just so that they can say they kept the super liberal Clinton from doing something super liberally.
If Medicare buy-in was reconfigured to be a QHP for Age 55 or Age 59.5 (IRA withdrawal age etc) or 62(Social Security early collection age etc) and then the benefits tweaked a bit using Medicare specific actuarial factors it could be placed onto the Exchanges as just another product from another insurer (Uncle Sam). People who had already chosen the super low cost Medicaid based plans would be no worse off. People who are currently choosing a Silver plan that is not Medicaid based and is paying Medicare +15 or higher to providers are probably going to move to the Medicare plan base as it will be a wide(r) network at roughly the same price point. People who are on plans that pay providers between Medicare +5 and Medicare +15 are in a gray zone, they may or may not be better off.
The regional issues are going to be significant where there is a single very low cost Silver plan with a large gap between #1 Silver and the #2 Silver and the new Medicare based plan sits closer to the #1 Silver than the old #2 Silver. That configuration allows a lot of people to get the #1 Silver for very little cash out of pocket. Shrinking the gap means they would having to pay more cash out of pocket as the subsidy calculation point moves much closer to the #1 Silver. Someone making $18,000 per year (155% FPL) where there is a $63 dollar gap between the #1 and #2 Silver can get the #1 Silver with full CSR for $1 per month as a de minimas payment. If the Medicare based plan was only $25 more per month than the #1 Silver, that person would be paying $38 per month.
One way of working through that issue would allow Medicare buy-in to be subsidized as if it is a QHP but to exclude it from the subsidy calculations. But again that is a political question. Excluding it from subsidy calculation will increase the CBO score.
But I digress, the ideal buy-in would be aimed at moving a significant proportion of the sicker people in the Exchange risk pool from insurers that pay providers Medicare +25 or Medicare +50 or Medicare +80 over to a plan that pays Medicare +0 with a good network. Probably that means a target age of 58 to 64 with a stretch goal of starting at 55.