Democrats face major fight over Medicare expansion

By | December 28, 2018

Democrats now have another major healthcare overhaul proposal to weigh as they begin arguing in earnest about the post-Obamacare future: A proposal to let people enroll in Medicare beginning at age 50.

The plan, which is being dubbed by its lead sponsor as “Medicare 50,” would allow people to buy into Medicare if they are between the ages of 50 to 64. People could purchase Medicare as an alternative to Obamacare plans if they are uninsured or if they want it instead of the coverage they’re getting through work.

The idea, previously introduced as the Medicare Buy-In and Stabilization Act, won’t become law while Republicans control the Senate. But backers hope that the Democratic House majority can generate support for the concept by holding hearings and advancing it in the lower chamber.

One obstacle they’ll face, though, is opposition from Democrats who favor other healthcare proposals, some more progressive and some more centrist.

Nancy Pelosi, the likely House speaker, has backed plans similar to Medicare 50 in the past. But she has shied away from an endorsement. And more than half of House Democrats in the 115th Congress co-sponsored the Medicare for All Act, a plan that would roll everyone into Medicare, getting rid of private health insurance and Medicaid.

There’s even more competition: Three different Senate bills would let people of any age buy into a public option built off Medicare. Another plan would let states allow more residents to buy into Medicaid, the program that mostly covers the poor, pregnant women, and people with disabilities.

“These bills are maybe the beginning of a discussion or maybe the beginning of laying out some ideas,” said Karen Pollitz, senior fellow at the Kaiser Family Foundation, which studies healthcare. “But probably not the endpoint. There seems to be a lot of exploring.”

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Another Democratic faction would prefer to focus instead on the more modest goal of shoring up Obamacare, whether by giving more financial help to younger adults, or by giving income-based help to more people.

Certain Democrats view enacting a public option as Obamacare’s unfinished business. Democrats fought bitterly among themselves over proposals for a public option during the drafting of the law but ultimately left it out in favor of the creation of nonprofit insurance startups known as co-ops, most of which have now shuttered.

Others view a Medicare expansion as step toward “Medicare for all.” Even Rep. Brian Higgins, D-N.Y., called his Medicare 50 idea “complimentary” to the Medicare for All Act in an interview with the Washington Examiner. His goal with the bill, he said, was to act quickly.

“That demographic needs protection today,” he said of people between ages 50 to 64. “They can’t wait … It would provide immediate protection to an age demographic that’s getting clobbered in terms of sky-high insurance premiums.”

Under Obamacare, older people have higher costs and premiums than do younger enrollees. Backers of the Medicare 50 plan say siphoning the older population out of Obamacare and into Medicare would reduce costs for all demographics.

Medicare currently has about 55 million enrollees, which include people 65 and older as well as people who are disabled. Higgins said he would anticipate about 60 million more people would become eligible for Medicare through his bill. Some of these would come from employer plans, because businesses would be allowed to pay toward employee Medicare premiums.

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The financing would not come from the current Medicare program, which is projected to become insolvent in 2026. Instead, the premium subsidies in Obamacare could go toward the public plans, and premiums individuals pay would also help fund them, explained Pollitz, who has studied the different Medicare expansion plans.

Higgins said he thought the offering of a public plan would help people have access to less expensive coverage, including lower-cost Medicare plans, and would drive down the cost of private plans.

“Even the offering of that option will have the impact of what competition is supposed to do: Reduce cost and increase quality,” he said.

But not everyone agrees that a Medicare buy-in would have such beneficial effects. Jonathan Keisling, healthcare policy analyst for the conservative American Action Forum, said he didn’t think that introducing a Medicare buy-in for a limited group would have a significant impact on the market.

Few people would have an incentive to buy into the plans, he said, because employer plans are more generous and because many people on the Obamacare exchange already get subsidies. He also noted that those who do buy in might be disproportionately sicker, making it difficult to offer lower premiums, particularly given the range of coverage that must be included to match them to Obamacare plans.

“I have serious doubts about how they could get premiums down that low based on how they say the premiums should be paying for the benefits,” he said.

Medicare 50 is likely face opposition from the medical industry, including from hospitals, who have said they would be concerned about facing lower reimbursement rates. In 2016, the American Hospital Association and the Federation of American hospitals came out strongly against a national public option.

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The fragmentation of the current system — in which individuals, private insurers, and different government programs all pay for healthcare — generally benefits the healthcare industry. They are able to charge private insurers more to make up for the gap left by the uninsured and government programs.

Keisling said that the Medicare buy-in could have higher enrollment if it received more federal subsidies.

“If it became popular, the providers’ concerns are legitimate,” he said. “You would be moving a bunch of people out of the private insurance market and into Medicare reimbursement levels, so that would put a strain on providers … waiting times would go up and you would have access issues.”

In response to providers’ concerns, Higgins noted that nearly all of them accept payment from Medicare. He added, however, that discussions over the bill would include a decision over whether to increase reimbursement rates. Doing so likely would require a tax increase.

“At some point the differences have to be reconciled,” Higgins acknowledged of the different details of the buy-in and other Medicare expansion plans, adding: “I don’t think that’s a difficult thing but it’s a thing we’ll have to take on.”