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Mon Jan 7, 2013, 07:21 PM

How would lowering the Medicare age save the system money?

As some of you know, I am working on a paper arguing against raising the Medicare age for my health policy grad school course. I am trying to decide which alternative solutions to propose, and one that I have seen here and on Kos is to lower the eligibility age to 55 or 60 (proposals to lower it to 0 are outside the scope of my paper, even though philosophically I agree). For those who advocate this, I would appreciate if you could help me understand what you are proposing and how you think it would keep Medicare solvent for longer.

Obviously, lowering the age without either a buy-in or an across-the-board hike in the payroll tax rate would not only not save money, but would worsen Medicare's solvency problem by increasing the number of beneficiaries without increasing the funds to pay for them. So I assume that is not what is being proposed.

I have looked into buy-in, but the problem is, the unsubsidized premium would be over $600 per month, which is less than what my self-employed parents currently pay for health insurance but still too steep for many of the people who would need it. And if you subsidize it, then it costs money rather than saving money (although the subsidies could potentially come from the amount that has been budgeted for subsidies on the exchange). But either way, it costs the govt. more money if the premiums are subsidized. Even if the Medicare buy-in is completely unsubsidized, I still don't see how it would save the Medicare trust fund money unless the premiums were higher than the estimated cost of providing benefits, which would mean making them even higher than $600 per month.

There's also the problem of adverse selection: if the bronze plans on the exchange have lower premiums (and fewer benefits or higher copays), the healthiest people ages 55-64 would be likely to choose a less expensive plan on the exchange, and those in need of more care would be the ones who buy into Medicare. So allowing Medicare buy-in at age 55 would not necessarily make the overall Medicare risk pool healthier, particularly when you consider the fact that some of the people that age who lack employer-sponsored coverage had to retire early because of health problems.

I am not saying that lowering the Medicare age is not good policy (I would lower it to 0 if I were in charge), but as a way to save the Medicare trust fund money I just don't see it.

Am I missing something?

42 replies, 3303 views

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Arrow 42 replies Author Time Post
Reply How would lowering the Medicare age save the system money? (Original post)
democrattotheend Jan 2013 OP
upaloopa Jan 2013 #1
democrattotheend Jan 2013 #4
Downwinder Jan 2013 #2
democrattotheend Jan 2013 #24
Downwinder Jan 2013 #25
JDPriestly Jan 2013 #32
Jackpine Radical Jan 2013 #3
Warpy Jan 2013 #5
democrattotheend Jan 2013 #7
Warpy Jan 2013 #12
TheKentuckian Jan 2013 #14
democrattotheend Jan 2013 #23
TheKentuckian Jan 2013 #35
CTyankee Jan 2013 #26
democrattotheend Jan 2013 #30
CTyankee Jan 2013 #31
JDPriestly Jan 2013 #33
Downwinder Jan 2013 #34
Pilotguy Jan 2013 #6
democrattotheend Jan 2013 #9
Yo_Mama Jan 2013 #19
Yo_Mama Jan 2013 #20
lumberjack_jeff Jan 2013 #8
democrattotheend Jan 2013 #13
Recursion Jan 2013 #37
lumberjack_jeff Jan 2013 #40
Faryn Balyncd Jan 2013 #10
democrattotheend Jan 2013 #15
Faryn Balyncd Jan 2013 #17
democrattotheend Jan 2013 #22
JaneyVee Jan 2013 #11
democrattotheend Jan 2013 #16
Yo_Mama Jan 2013 #18
democrattotheend Jan 2013 #21
PoliticAverse Jan 2013 #27
democrattotheend Jan 2013 #29
CTyankee Jan 2013 #28
democrattotheend Jan 2013 #36
CTyankee Jan 2013 #38
PETRUS Jan 2013 #39
democrattotheend Jan 2013 #41
PETRUS Jan 2013 #42

Response to democrattotheend (Original post)

Mon Jan 7, 2013, 07:25 PM

1. People would be buying part B coverage

but not using it because of better health thus the cost per person would go down.
A bigger pot spread over more people.

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Response to upaloopa (Reply #1)

Mon Jan 7, 2013, 07:42 PM

4. The current premiums for Part B are heavily subsidized

If people under 65 were allowed to buy in for the premiums currently charged to Medicare beneficiaries, it would cost the system a lot of money, because the premiums for Part B that current beneficiaries pay do not nearly cover the cost of providing the benefits.

If the buy-in were not subsidized for those ages 55-64, the cost would be over $600 per month. Would people ages 55-64 who don't frequently use medical services opt to pay that much when there are cheaper plans out there with higher deductibles and copays? Other than a few people who might choose Medicare over a private plan for ideological reasons, I can't see too many healthy people opting to subsidize Medicare by buying in when there are more affordable options.

I know that COBRA, while designed not to cost employers much other than administrative costs, has ended up costing employers more than expected because of adverse selection. If the employer had a decent healthcare plan, premiums for COBRA can be very expensive, way more than any healthy individual who uses medical services infrequently would opt to pay. Thus, COBRA has made the employer's risk pool sicker on average because only those who need frequent medical attention opt into it.

Of course, there is always the option to subsidize Medicare buy-in, but then that would cost the system money rather than saving money.

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 07:33 PM

2. Some people put off addressing medical problems

until they get on Medicare. If those problems were treated at an earlier time, the costs might be reduced.

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Response to Downwinder (Reply #2)

Mon Jan 7, 2013, 11:20 PM

24. Any idea where I could get some numbers on that?

Has anyone done an estimate of how much would be saved as a result of people not delaying care? I think you could be right but I have not been able to find any academic or policy studies that have run the numbers.

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Response to democrattotheend (Reply #24)

Tue Jan 8, 2013, 12:34 AM

25. I can only speak anecdotally. I don't know if there are

figures available. I have not seen any.

There may be some due to the ACA early care policies.

Have you checked with PNHP.ORG?

Edited to add: How many of your target group are on Medicaid?

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Response to democrattotheend (Reply #24)

Tue Jan 8, 2013, 02:47 AM

32. I have never researched this, but I have a couple of ideas

about how to proceed.

Areas in which early diagnosis can lower the costs of later treatment are with regard to

1) blood pressure -- getting a person on medication that is appropriate earlier rather than later can help prevent strokes which are difficult to treat and can result in severe disabilities, even complete dependency on a caregiver;

2) diabetes -- again, if caught early, treated and continuously followed, can be controlled so that later costs for things like amputations and other horrible outcomes are less likely or less severe;

3) cancer -- early diagnosis can mean longer life and the ability to live independently for a longer time;

4) various conditions like high cholesterol, detrimental life styles like lack of exercise or drinking or eating too much, and other similar things can be easily treated if you take blood tests early enough to discover them.

5) treating people with chronic back problems and other skeletal or muscular problems can lessen the need for expensive surgery later on. I'm thinking about directing people into physical therapy and exercise early enough to avoid really serious, expensive problems.

One thing I notice about this list is that early diagnosis is the key to saving money. I don't have the numbers on the gains that might be had, but as one who is now older, it would have been really useful for me to have had healthcare that focused on simple tests, on discovering, diagnosing and treating health problems that cost a lot of money if they are neglected and allowed to become very serious. Diagnosis would not be enough unless followed up by treatment.

The ACA may take care of a lot of the problems caused in the senior years by a lack of the kind of healthcare during the 50s that I am discussing.

At this time, a lot of people in their 50s have lost their jobs and do not have the money to buy healthcare.

I had to buy my own health insurance prior to qualifying for Medicare. Like most people my age, I had pre-existing conditions that pushed up the cost of my insurance. I got a really reasonable plan with Kaiser but it still cost a lot, I mean a lot of money compared to what I was able to earn at times.

If people have healthcare through their work, that would be better than Medicare. But if they don't starting people on Medicare before 65 at least for preventive care and pre-existing conditions would be a good idea.



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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 07:34 PM

3. I think you would have to do a reshuffle of the entire payment system

to make it save money, and the money saved would have to come out of the pockets of the private insurance industry.

Let's take the extreme example: Single-payer Medicare for everyone. We could pay for this by diverting the money that people (including employers) are now putting into the private insurance plans into the common single-payer fund. This would be done with some sort of taxation scheme. Then you would have a universal pool in which the young & healthy are subsidizing the care of the elderly and ill, but with the understanding that when they are old and ill, a new generation will be subsidizing their care. We are currently devoting about 18% of GDP to health care under our present system (while failing to insure everyone) while other nations are providing much better care for their entire populations while spending about 10% of their GDPs for the purpose.

Unfortunately, you're right in that this would probably be a hard sell in the current social environment. But just give the current dysfunctional system a few more years to piss everyone off, and maybe cultural attitudes will change.

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 07:44 PM

5. It makes sense when you look beyond the Medicare trust fund

to the larger world out there, a world in which people are being cut off from their jobs with benefits in their mid 50s and are either thrust into the for profit market as individuals (if they've got vast amounts of money) or left without insurance. Most people fall into the latter group.

Such people are costing the whole system a vast amount of money as they are forced to choose between food and taking care of chronic conditions most have developed by their mid 50s and risking needing care when it's gotten really expensive. Savings are depleted and they are being left destitute as they have to pay the going "private patient" rate at the hospitals they end up in, 300% to 500% higher than the rate insurance companies are charged for the same care. In addition, if their resources are inadequate to cover their care, they are then thrust into the Medicaid program, then to Social Security Disability, after which Medicare finally kicks in early, but not in nearly enough time.

And that's if they survive what should have been prevented very cheaply.

The tragedy of all this is a human one, not solely an accounting one. People are unable to afford minimal care that keeps them out of hospitals, then lose every single thing they have when they can't postpone that care any longer because they are deathly ill.

Looking at a trust fund is not telling the whole story here. If all you look at are dollars, you might be a Republican. Looking at the current consequences of not lowering the Medicare age to 55 and being appalled by them makes you a Democrat.

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Response to Warpy (Reply #5)

Mon Jan 7, 2013, 08:02 PM

7. Please don't call me a Republican

I agree with you philosophically and personally. My parents are both self-employed and fall in that age bracket and pay through the nose for health insurance and I wish to g-d that they could buy into Medicare.

But I am trying to write a serious policy paper and I need to figure out how to argue that we can afford to lower the Medicare age given that Medicare's solvency is already in jeopardy. I agree that our system is a mess and it's a human problem, but I need to address the accounting problem in order to propose a viable solution. I cannot just say that it might exacerbate Medicare's funding problems but we should do it anyway because it's the right thing to do.

A big part of my paper is about how many people 55-65 are already getting squeezed out of the job market and that raising the Medicare age would make it worse. I want to propose that the system be changed so that Medicare becomes primary rather than secondary insurance for those over 65 who keep working, and I want to propose lowering the Medicare age in order to lower employers' costs of employing older workers and enable them to provide insurance more cheaply to workers under 55. But I can't figure out a way to pay for that without a significant hike in the payroll tax.

As a progressive who cares about preserving Medicare, I can't propose something that will exacerbate Medicare's funding woes and likely result in cuts to benefits. Anything that makes the Medicare trust fund less solvent will ultimately help Paul Ryan turn it into a voucher program.



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Response to democrattotheend (Reply #7)

Mon Jan 7, 2013, 08:27 PM

12. Easy. You assure solvency by having a full price buy in

It's still going to be considerably cheaper than for profit insurance, which is why they'll all scream bloody murder over it, but they honestly have little enthusiasm for insuring older people with health problems and the din will die fast, just like it did when Medicare first came in.

Medicare for seniors over 65 is subsidized by younger workers paying premiums in but who are ineligible for benefits until they are 65 or become disabled. Removing the subsidy for people 55-65 and allowing them to buy into the plan makes a great deal of sense since the healthy seniors will buy in along with the sick ones. It might be successful enough to offer a sliding scale for poorer seniors.

At least a Medicare buy in will take care of the major medical problems a lot more cheaply than leaving them uninsured will, the hospitals charging the Medicare rate instead of the private pay patient rate.

That still leaves a gap among the underemployed who will have trouble paying for their daily medication. However, lowering the Medicare age by offering a full price buy in does make economic sense.

And nobody called you a Republican. The single minded focus on dollars in a trust fund is a Republican one. They never consider the human cost nor do they consider options beyond full, subsidized coverage. Nor do they ever consider fair pricing of hospital services nor do they ever consider the original purpose of Medicaid, a sliding scale insurance program for the working poor, not just a program of last resort for those made destitute by health care bills.

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Response to democrattotheend (Reply #7)

Mon Jan 7, 2013, 08:55 PM

14. A larger, healthier pool would seem to lower the cost per participant

and there would be a systemic saving from folks being in the more cost efficient pool with no marketing or profit. Medicare is one pool, not thousands so that will drive efficiency the more the better.

Next year the majority of people will be subsidized anyway so I don't think that matters to systemic costs.

Expanding Medicare would add cost to Medicare but it would lower overall cost and by taking another level of those most likely to use care, it would lower personal costs for those left out of the expansion.



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Response to TheKentuckian (Reply #14)

Mon Jan 7, 2013, 11:14 PM

23. You just gave me a good idea

Could they set it up so that people could use the subsidies they get to buy health insurance on the exchange to buy into Medicare instead? That way you could subsidize it without costing Medicare more money, although they would have to set the buy-in rate at a level that factored in adverse selection.

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Response to democrattotheend (Reply #23)

Tue Jan 8, 2013, 09:22 AM

35. Sure, it just has to be passed.

I think the best view is system wide followed by individual cost. The more pots, the greater the cost.

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Response to democrattotheend (Reply #7)

Tue Jan 8, 2013, 12:54 AM

26. Well, how do other rich nations do it by having universal health care?

Surely you know that countries covering health care for all of their citizens do so at a lower cost and with better outcomes than we do with our private system.

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Response to CTyankee (Reply #26)

Tue Jan 8, 2013, 01:29 AM

30. Of course I know that

But that's not what I am looking at in my paper. I am looking at how to prevent the Medicare trust fund from becoming insolvent without raising the retirement age. Ideally I want to lower the age but I can't figure out how doing so actually saves money, although I had a few ideas, such as charging an unsubsidized premium that accounts for adverse selection but allowing people to use the subsidies they get to buy coverage on the exchange to use them to buy into Medicare instead if they prefer. I am also going to propose allowing people to take Medicare benefits at 62 in exchange for paying a higher premium for a certain number of years after to recoup the benefit. Sort of like a financing plan but without exorbitant interest rates, and similar to how Social Security works. I think this might be a decent option for those who have to retire early or lose their jobs and live in states that declined the Medicaid expansion. It's not ideal but it's revenue neutral and it would at least provide a lifeline for some who might otherwise die or become much sicker waiting for Medicare.

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Response to democrattotheend (Reply #30)

Tue Jan 8, 2013, 01:42 AM

31. But you do understand you face a problem by segmenting this one demographic in the overall

system where those people may not have had consistent and adequate health care all along? OF COURSE, there is problem doing that. however, that is what we have gotten ourselves, with this for profit health insurance system in this country.

So you are faced with alternatives that should have been avoided all along thru universal coverage. If I were you, I would acknowledge that right off the bat since the only thing you CAN do is try to ameliorate a problem that has arisen because of a bad system. Otherwise, you are playing into the hands of the opposition that really wants to keep the insurance companies ripping us all off. I don't doubt your sincerity here, just hoping you will state the problems inherent in dealing with people who have been in our crazy system up to age 55, and then battling against them.

What you have come up with sounds like the best option, given the circumstances you are facing. You might also want to project what doing nothing would result in. If I missed that part I am sorry...

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Response to democrattotheend (Reply #7)

Tue Jan 8, 2013, 02:53 AM

33. One thing you might want to look at is the number of people in their 50s who have to rely on

Medicaid for their healthcare. Then you might compare the cost of Medicaid with that of Medicare. Both are government-subsidized programs. Which one is cheaper for the government?

I'm not sure how you could do this, but it might give you some sort of approach to the problem.

I know people in their 50s who lost their jobs and have serious illnesses. They rely on Medicaid. It's really tough.

Do you know how the costs of treating 50-year-old and over people in a Medicaid program compares to treating them in Medicare? That might be interesting.

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Response to JDPriestly (Reply #33)

Tue Jan 8, 2013, 06:00 AM

34. To bring Medicare up to the level of Medicaid requires (roughly):

$300 per month

$100 Part B
$170 Medigap
$ 30 Part D

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 07:58 PM

6. Open Medicare to everyone regardless of age...

Charge 5% of annual income for full family coverage. More money coming in and a younger customer base means more money in the system.

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Response to Pilotguy (Reply #6)

Mon Jan 7, 2013, 08:09 PM

9. In theory, I might agree

Although I think it would have to be higher than 5% of annual income. In Germany I believe it's 8%, and I don't know if that includes dependent care.

But for my paper, I am looking specifically at proposals to offer Medicare to people ages 55-64. I want my paper to be a serious proposal and not just a liberal fantasy.

My feeling is that if employers, especially small employers, could offload people ages 55 and up onto Medicare and only provide secondary insurance for them, they would be able to offer full insurance for workers under 55 and supplemental coverage for those over 55 much more cheaply, and would be less inclined to squeeze older workers out of the workforce.

So I think lowering the age to 55 would be good policy, but I have to find a way to make it cost-neutral for Medicare since the program is already facing serious funding shortfalls in the not so distant future.

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Response to democrattotheend (Reply #9)

Mon Jan 7, 2013, 09:24 PM

19. The charge in Germany is over 14% of pay.

http://www.toytowngermany.com/wiki/Health_insurance

That's kind of an explanation of how their public/private insurance scheme works. As of 2009 because they were running a deficit, the cost was increased to 15.5%, but then it was lowered to 14 something as a stimulus.

In most modern countries, if you figure the expenditures by payroll it goes between 15 - 20% of payroll.

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Response to Pilotguy (Reply #6)

Mon Jan 7, 2013, 09:29 PM

20. It would cost way more than that.

The median current dollar salary is 41,000, and 5% of that is only $2,050 a year.

The median household income is around 50K, and 5% of that is only $2,500 a year. It would cost around 17% of payroll. I figured it out. That's for the current Medicare package, $1,000 deductible hospital, 20% copay, current Medicare prescription coverage, and physician & outpatient (three different insurance packages under Medicare).

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 08:08 PM

8. Hold on.

Where does $600/month come from? If it's predicated on current costs for people 65 and up, then it's not a useful figure because medical care for a 55 year old is less than for a 75 year old.

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Response to lumberjack_jeff (Reply #8)

Mon Jan 7, 2013, 08:46 PM

13. That figure is for 55-64 year olds

It was calculated during the 2010 debate over the ACA during the brief period when Medicare buy-in was on the table. It might actually be a little higher now since 2 years have gone by and health care costs go up every year.

http://www.slate.com/articles/news_and_politics/prescriptions/2009/12/ask_dr_kildare_part_3.html

I had a better source but I can't find it. I will let you know if I do.

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Response to lumberjack_jeff (Reply #8)

Tue Jan 8, 2013, 09:42 AM

37. 65 + is $800; the $600 is an actuarial cocktail napkin sketch

Medicare is more expensive than a lot of DUers seem to think.

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Response to Recursion (Reply #37)

Tue Jan 8, 2013, 10:46 AM

40. I believe you, but it's important for me to understand the basis.

$600/month doesn't surprise me at all, it is in line with what we pay for my own high deductible insurance (age 51)

I strongly doubt the OP's point of adverse selection. It is unlikely (IMHO) that medicare premiums will be significantly more than the bronze plan in the exchange.

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 08:22 PM

10. I would have jumped on $600/mo....

The price my wife an I paid for a $30,000 deductible policy rose to $428/mo per person, even though we had paid for over 25 years without ever exceeding our deductible (no claim had ever been paid by the insurance company since our youngest child had surgery over 25 years ago, and no claim had been paid on either of us in over 30 years.) Yet we were in our 60's and other carriers refused to write insurance on us. So the $856/mo we paid between the 2 of us only insured us against catastrophic illness. $600/mo per person for real insurance would have been a bargain we would have jumped on in a millisecond. And it would have saved the Medicare system money because our actual expenses were significantly less than $600/mo/person.

One of the reasons it would have been a win/win situation for us, as well as for the Medicare system, has to do with the opaque and discriminatory pricing system that has evolved in medicine in the last 30 years.

That is that if you are uninsured, or have a high deductible policy, under the current system you run the risk of being billed for the fantasy "regular rates" that hospitals charge uninsured or under-insured patients, rates that are 300-600% higher than the rates charged insurance companies that negotiate discounts, whereas if you were able to buy in to Medicare, you would be responsible for 20% of a reasonable rate.

It is because of this malignant, discriminatory and predatory pricing system that now exists in medicine, that Medicare, by virtue of its fair pricing system and efficient administration, could charge a rate that would provide a reasonable profit to medical providers, and still be done with a fee system which would allow Medicare to save money, and still be a bargain to American patients.




Edited to add:

Here are some links to the extent (250-600%) to which both uninsured patients (and many with high deductible policies from insurance companies which have not negotiated steep discounts from providers) are over-charged (They may be told they can get a "10-20% "discount if they pay cash in advance):
http://journals.democraticunderground.com/Faryn%20Balyncd/1













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Response to Faryn Balyncd (Reply #10)

Mon Jan 7, 2013, 08:56 PM

15. That is great information, thank you

My parents are self-employed and we used to have high deductible insurance. My mom eventually switched us to more comprehensive (and more expensive) insurance in part because we were paying so much more for doctor's visits than what the doctors would get from the insurance companies. I think doctors raised prices for private paying customers to compensate for the lower rates insurance companies and Medicare paid. Sometimes my mom would be able to negotiate a lower rate for paying cash, but often we would pay three times what the doctor would get paid by an insurance company.

If the exchanges had been in effect at the time, wouldn't you have been able to get a better deal that way than what you have now? Once Obamacare goes into effect fully, wouldn't you have more options since insurers can no longer cherry-pick?

With those other options soon to be available, I am not sure how many healthy people like yourself would choose Medicare over a cheaper plan on the exchange.

It would have been good if they had at least done Medicare buy-in for the 4-year waiting period before 2014 instead of the high risk pools which were too expensive for most people.

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Response to democrattotheend (Reply #15)

Mon Jan 7, 2013, 09:13 PM

17. Yes, the exchanges would offer some better options....



....but the private insurance based system had significantly higher administrative costs than does Medicare, and significantly higher administrative costs than would a Medicare-for-All system.

With of these higher administrative costs, how would a private insurance based system be able to provide a more cost effective plan than would Medicare-for-All?











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Response to Faryn Balyncd (Reply #17)

Mon Jan 7, 2013, 11:06 PM

22. The argument about Medicare's administrative costs is kind of misleading

Because it doesn't take into account some of the administrative functions of Medicare that are performed by other parts of the government. For example, the IRS collects the taxes that fund Medicare, whereas private insurance has to hire people to process premium payments. The administrative expenses for Medicare don't include expenses of other parts of the government that help administer it. Also, private insurance is subject to state excise taxes, which is counted as an administrative expense.

Besides, even if Medicare does have lower administrative expenses, it's still not necessarily the best option for everyone. Healthier people might rationally choose a plan that has a lower premium than the unsubsidized Medicare premium with a higher deductible. Medicare at age 55 might also not be the best choice for very poor individuals either, since the out of pocket costs are higher than Medicaid or even some HMO's. Medicare provides a better choice of doctors than either Medicaid or a cheap HMO but it may not be affordable for everyone.

Also, I have read some arguments that Medicare's pay structure is inefficient and rewards waste by paying doctors per service rather than based on overall health outcomes. I think there is some merit to that, although I would be wary of going too far in the other direction (I think the early HMO's went too far in rewarding doctors for doing too little).

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 08:27 PM

11. -_-

Lowering Medicare age will increase healthy vs. ill demographics and bring more revenue, reduce expense per capita on Medicare population, lower employee health costs, and protect a population of folks who if they lose employment often cannot afford insurance as individuals.

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Response to JaneyVee (Reply #11)

Mon Jan 7, 2013, 09:07 PM

16. Are you talking about lowering the age with buy-in?

Otherwise, it will still make the program more expensive, because adding 5 slightly healthier people to a current pool of 30 still increases costs. You still have the 30 sick people plus the 5 slightly healthier people. It would only save money if the 5 healthier people paid a full unsubsidized premium.

Even if it decreases the per capita cost for Medicare it still increases overall costs by adding more beneficiaries unless you create a new revenue stream. Having these people pay the Part B premiums currently charged to those over 65 would not be nearly enough, as those premiums are a fraction of the actual cost of providing the services.

I agree with your last two arguments, and I am making both arguments in my paper. But I need to figure out a way to argue that the Medicare system can afford to take on more people. Although it would only lower employee costs for employers with fewer than 20 employees, since employers with more than 20 employees are required to provide workers over 65 with the same benefits as other workers regardless of eligibility for Medicare (Medicare acts as secondary coverage in those instances).

The fact that it would save small employers and younger individuals money on health insurance by taking older people out of the risk pool is a strong argument for why it should be done, but it doesn't help with the argument that it would save Medicare money.

I just don't see how it would provide an affordable option for most people ages 55-64 unless it's subsidized, and I don't see how Medicare can afford to subsidize it when the Medicare trust fund is already in trouble.

I might advocate for raising the Medicare tax across the board to fund lowering the age, but even though younger people would benefit from earlier access and potentially from lower costs on the exchange or through their employer, I am not sure I like the idea of taking more money out of low and middle class workers' paychecks.

Another option would be to allow employers to subsidize Medicare buy-in for their older workers in lieu of providing insurance to them or paying a fine. This might encourage enrollment from healthier 55-64 year olds as well as sicker ones, since paying the $600/mo (or even $700/mo) might be cheaper for employers than the cost of providing primary group insurance for older workers. However, the ADEA would have to be rewritten to allow employers to help their employees buy into Medicare and use the employer-provided insurance as secondary coverage without being sued for age discrimination.

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Response to democrattotheend (Original post)

Mon Jan 7, 2013, 09:16 PM

18. I don't think so

I can't see any way in which it would save the system money either.

The only way in which Medicare "saves" money is when reimbursements are pushed below those for non-governmental insurance, but then you are really shifting the costs to the private insurance. There are already adjustments in effect that pay extra to areas that have a whole lot of Medicare patients - esp. rural hospitals.

Under Obamacare, a significant amount of privately insured individuals will be getting subsidized by the government, so in fact that "savings" is going to greatly diminish.

Everything I know tells me that you're right.

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Response to Yo_Mama (Reply #18)

Mon Jan 7, 2013, 10:49 PM

21. I wish I weren't

I want to find a viable way to expand Medicare to those 55 and up without bankrupting it, because I think from a policy perspective it is worth doing. I don't think it would really save the system money but it could be done in a way that is revenue neutral, although it would not necessarily be the best option for everyone in that case.

I did have a couple alternative ideas:
- Letting people use the subsidies they would get to buy insurance on the exchange to buy into Medicare (at the unsubsidized rate) if they prefer. That would not cost extra for Medicare because the subsidies have already been budgeted
- Letting employers subsidize Medicare buy-in for employees over 55 if they do not provide group coverage in lieu of paying a fine
- Raising payroll taxes for everyone and having Medicare start at 55 and serve as primary coverage for those who have it while working. Younger people would pay more without getting immediate benefits, but they might see higher wages or lower premiums if their employer saved money on health insurance. Since the ACA, Medicare and Social Security are already structured as a subsidy from young to old, I would want to see numbers on this before I could really support it
- Having a graduated eligibility age for Medicare as with Social Security, where people could start getting Medicare at 62 but would pay a higher premium for Plan B or a higher cost-sharing percentage for the life of their participation or for a certain number of years. I know this would be a hardship for some people but it would at least enable people who lose their jobs to get necessary care earlier, and fewer people would die waiting for Medicare. It's not as progressive as some of the other proposals but it might be more politically palatable, and paying a slightly higher premium over a number of years might be easier than paying $600 per month between ages 62 and 65. It would be like a financing plan for early Medicare, except without the exorbitant interest rates that lenders charge.
-

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Response to democrattotheend (Reply #21)

Tue Jan 8, 2013, 01:05 AM

27. Have you found anywhere a table that breaks down Medicare expenditure by age of the insuree ? n/t

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Response to PoliticAverse (Reply #27)

Tue Jan 8, 2013, 01:24 AM

29. No, but that's a good idea

I have been trying to show how much it would cost employers to absorb the cost of insuring people ages 65-67. Towers-Perrin had data on employees 55-64 compared to younger employees but not for those over 65.

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Response to democrattotheend (Reply #21)

Tue Jan 8, 2013, 01:10 AM

28. I am no expert on Medicare but it seems to me that you are making a case for Medicare for all

starting at birth, where they have appropriate health care all along. By the time people get to the age category you are dealing with, under our system, they could typically be sicker or more limited physically. That is a problem. By limiting your scope to this one demographic and under our current system, you face a number of problems you wouldn't have if there had been Medicare for them seamlessly all along.

I agree with you that Medicare needs adjustments in how it is run, but once you squeeze out the waste, fraud and abuse you have a much more workable and affordable system. We should be working towards THAT rather than immediately jumping to cutting benefits to beneficiaries.

Again and again I have read that medicare provides health care more efficiently and at lower costs than our system where $$ are skimmed off by health insurance companies who are interested in making a profit, not primarily seeing to it that people get good health care. The idea that those companies are working for its insurees benefit is absurd. And so is our system.

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Response to CTyankee (Reply #28)

Tue Jan 8, 2013, 09:40 AM

36. In theory I would probably support Medicare for all

But that's not the direction I want to take my paper. I want to propose some incremental ideas, ideally things that have not already been written about ad nauseum and that might be politically feasible if Democrats were ever to take back Congress.

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Response to democrattotheend (Reply #36)

Tue Jan 8, 2013, 09:45 AM

38. Yes, I can see that from what you've written. I was just commenting on the problems inherent

with starting with this age demographic. It's a tough argument for the reasons you have articulated very well. And the opposition will taunt and say "see, Medicare costs more!" But we have to start somewhere.

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Response to democrattotheend (Reply #36)

Tue Jan 8, 2013, 09:50 AM

39. In case you missed it.

The other day I offered you an idea that projects considerable cost savings, but received no response. The post is here:

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2119174

Here's a copy of the message:

From the CEPR - http://www.cepr.net/index.php/publications/reports/free-trade-health-care/

Free Trade in Health Care: The Gains from Globalized Medicare and Medicaid

The huge gap between the cost of health care in the United States and the cost in other countries with comparable health care outcomes suggests the potential for substantial gains from trade. This paper describes one mechanism for taking advantage of these gains – through a globalization of the country’s Medicare and Medicaid programs. The projections in this paper suggest that the country’s long-term budget situation would be substantially improved if beneficiaries of these two programs over the age of 65 were allowed to take advantage of the lower-cost health care available in other countries (that also have higher life expectancies than the U.S.). This could also allow them to enjoy much higher retirement incomes than they would otherwise receive.

Full report as a PDF here: http://www.cepr.net/documents/publications/free-trade-hc-2009-09.pdf

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Response to PETRUS (Reply #39)

Tue Jan 8, 2013, 02:17 PM

41. I did miss it

Thank you very much. This does look interesting.

I apologize for not responding sooner.

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Response to democrattotheend (Reply #41)

Tue Jan 8, 2013, 03:21 PM

42. No apology necessary. Hope it's helpful!

Even if you can't use it, it's interesting.

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