Medicare age, Social Security, exchanges and a deal
November 28, 2012 7 Comments
A new poll shows that raising the Medicare age slowly to 67 (presumably to unify it with the Social Security full retirement age) is not popular. It is a bad idea in policy (TIE FAQ is good) terms because all you are doing in a state with an exchange and a Medicaid expansion is mostly shifting the healthiest Medicare beneficiaries into a smaller risk pool so it will be more expensive. In a state without a Medicaid expansion, you will get more uninsured near poor who are likely to have relatively high needs due to age. I have often said it is also a near certainty that we will do this (raise the Medicare age) some day because for many Republicans it sounds like “fundamental reform” and they haven’t shown themselves to have so many ideas on what to actually do in health reform, and certainly not the political will to push them. Raising the Medicare age to 67 remains popular with conservatives because it is a simple idea that seems consequential in ways that they assume will reduce spending, and seems bold. As the FAQ above shows, that is not really true, but this idea remains front and center for many.
Playing along, Austin Frakt tweeted out the following good question
The analog would be a reduced Medicare benefit (fewer covered services and/or higher cost sharing) for the balance of ones life. That is what happens with Social Security. If you retire at 62, you receive reduced Social Security benefits for not only your entire life, but the entire life of a spouse who may receive benefits based on your standing in Social Security(I have tried many times to explain to my mother in law that that is a big part of why her Social Security benefit is lower than many of her friends, even though her husband has been dead for 12 years; he starting claiming benefits at 62 due to health problems).
It might not be such a great idea to have a literal analog (reduced health care benefits for the balance of earlier claimers’ lives, given they are likely to be sicker than average), but an early Medicare benefit would be a good option generally. A big part of the calculus is “as compared to what?” If we are assuming exchanges are up and going, an early Medicare benefit allows some into a larger risk pool, and especially if they are more likely to be ill, they would improve the risk pool of exchanges. If you assume “no we will fight exchanges and not do Medicaid expansion” you are just saying you are willing for some to not have reasonable health and insurance and care. Not my preference.
However, we do need a deal at some point on health reform, not really for the fiscal cliff, but because it is too consequential to forever remain a political football. Down the path suggested by Austin’s tweet, what could the parts and steps look like?
- Any state that sets up an ACA exchange, in that state, we will demonstrate competitive bidding in Medicare advantage 2 or 3 years later, using the experience of the state exchanges to inform (Austin’s FAQ on comp bidding is great).
- Two or three years after that, we move to allow a “Medicare buy in” for persons younger than 65, say to 62 (or 60 or whatever). This will be ~ 5 years after state based exchanges have been up and going and will give time to see if there are parts of states in which private plans don’t seem to be working out (most likely rural areas with few people, and more difficult to set up networks, etc.). There are endless permutations (only private options in early Medicare years, different benefits, depends on how many plans available in a county, etc.)
- If we were going crazy with this, then after that, allow states to start buying in low income portions of Medicaid (not duals and long term disabled) into private insurance sold in exchanges, after they were up and going and the risk pool is getting larger and larger.
- Then we might start letting more and more people the choice of buying in the exchange and over time, slowly move away from health insurance as a benefit of employment.
If you took seriously the implications of unifying Medicare’s age with Social Security, it starts the conversation, not ends it.