By Mike King
Part of the proposed Senate compromise on the public option stalemate over health insurance availability includes a very interesting – and timely – alternative: allowing 55- to 64-year-old Americans to buy into Medicare starting in 2011.
This is the first time in the long debate over reforming health care that expanding Medicare – the 45-year-old program guaranteeing insurance for America’s senior citizens – has generated serious discussion. That it might become a part of the eventual compromise on reform raises some interesting long-term issues, and could logistically serve a very useful purpose.
As American employers have downsized and shed millions of workers in recent years, the 55- to 64-year-old worker group stands out for having “voluntarily” taken retirement rather than risk being laid off. This trend line is likely to continue as long as the recession lasts, and probably even longer since these are often a company’s most expensive employees.
Many of these workers accept severance packages that allow them to continue health care coverage as long as the severance lasts. But after that, unless they start taking a pension and are eligible for a retiree health plan, they lose coverage. (They can also lose retiree coverage if a company gets in really deep trouble.) When that happens, things can get complicated fast, unless they can get on another payroll with a group-health plan or can afford the steep premiums to maintain their coverage through COBRA.
A good number of these former workers also have pre-existing, chronic conditions like hypertension, mild diabetes, asthma and high cholesterol, etc. They need close monitoring and regular medications to stay well. Private insurers eschew them because of that and can exclude them from coverage. Even if the new rules of health reform forbid denials on the basis of pre-existing conditions, this group would still have to pay substantially higher premiums than their younger counterparts enrolling in the same plans. That’s what makes this Medicare compromise so interesting, even if new enrollees have to pay the full cost of premiums, estimated to be about $7,000 a year. (Presumably some of them would eventually qualify for subsidies based on their income.)
Medicare beneficiaries often report higher satisfaction rates for their coverage than private insurers. The plan is relatively simple to administer and, because the government does the negotiating with hospitals and doctors, is more cost-effective than what can be offered in the private sector. That’s why liberals have for years pushed the idea of “Medicare for All” as the best public option alternative. This compromise falls far short of that, but it does take a giant step in that direction and is a logical extension that deals with the practical realities of the new American workforce.
Of course hospitals and physician groups hate it and are expected to fight it vigorously. Medicare’s negotiated reimbursement rates are often 10 to 20 percent lower than the private sector and these big players aren’t ecstatic about that – even if it could be a big benefit for millions of hard-to-insure Americans.
But at least now it is on the table.
Mike King is a retired journalist who specializes in writing about health policy issues. He also serves as editor and administrator of the Healthy Debate blog.