Medicare is broke. One health care “reform” idea has been to expand its age eligibility, which obviously would add to the program’s cost. People’s health care costs tend to rise steadily as they age, so the group just under typical Medicare eligibility at age 65 is fairly expensive. This report examined the effect on private health insurance of moving older workers and their older family members to Medicare. (KFF Report) Note that currently Medicare is always a secondary payer when someone has private insurance, so not sure if the authors are assuming this changes. If not and the worker continues to have access to their employer’s health plan, shouldn’t be much effect on Medicare or the employer. The researchers find that lowering Medicare eligibility age to 60 would lower employer health plan spending by 15%. Lowering it to 55, would reduce spending by 30% and to age 50 by 43%. Those figures assume that everyone switched from the employer plan to Medicare. Total health spending might also decline because Medicare sets the rates it pays providers and they are substantially lower than the rates typically paid by employer health plans. Health care providers claim they lose money on Medicare, which is dubious, but if a lot of their business switches to Medicare, there will likely be substantial political pressure from providers to increase Medicare payments. And they would likely raise their rates even more to the remaining private health plan business. Not the smartest idea in the world to muck around with a program that is already broke. And more government in anything usually means inefficiency and poorer quality.
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
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Large health insurers have increasingly become providers of care as well, in another sign of consolidation in the health care system that should concern everyone, as the quality and cost...
June 16, 2021