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What are the Potential Effects of Medicare Buy-In? | Web version
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Congressional alert
December 5, 2019
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laflor/Getty Images
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Policymakers have discussed allowing people under the age of 65 to buy into the Medicare program to help increase access to health coverage. Researchers recently analyzed how allowing adults ages 50 and older to buy into the Medicare program could affect health insurance coverage, individual market premiums, and federal health care spending.
The authors considered a base buy-in scenario that assumes 50-to-64-year olds are eligible for the buy-in, advance premium tax credits and cost-sharing reductions are available on the buy-in, and—like traditional Medicare—the buy-in has no out-of-pocket maximum. They then estimated eight alternative scenarios that varied based on assumptions about the design of the buy-in and consumers’ response to the program.
Using RAND’s COMPARE microsimulation model, researchers found that a Medicare buy-in proposal could offer significantly more-affordable coverage to older adults but might also lead to higher premiums for some people remaining on the individual market:
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- In the base Medicare buy-in scenario, 6 million people would enroll in the buy-in, relative to a base of 63 million 50-to-64-year-olds in the U.S. Across all scenarios considered, between 2.8 million and 7 million people would choose to enroll. The buy-in has little to no effect on total health insurance enrollment; roughly 246 million people under the age of 65 would be enrolled in insurance in all scenarios, including the scenario without the buy-in.
- Under the base buy-in scenario, the study estimates that the premium to buy into Medicare would be about $10,000 per year, before accounting for Advance Premium Tax Credits (APTCs), in 2022. Total out-of-pocket health spending (premium contributions plus cost-sharing at the point of service) would fall, on average, by 16 percent to 35 percent for those who move from ACA-compliant individual market coverage to the buy-in.
- When older adults move out of the individual market, insurers are left with a smaller pool of younger, less healthy, and relatively expensive people given their age, leading to higher premiums for those left in the ACA-compliant individual market. It could increase premiums for those remaining in the individual health insurance market by between 3 percent and 9 percent. The RAND model accounts for the fact that low-cost older adults are more likely to enroll in the insurance exchanges than low-cost young adults, and these healthy older people act as a stabilizing force.
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For questions or to discuss this research, please contact Jared Perkins. |
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RAND Congressional Resources Staff
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