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Clinton Medicare Buy-In Plan May Appeal to Insurers, Employers

By Kerry Young, CQ Roll Call

July 22, 2016 -- Employers and insurers might benefit if Democrat Hillary Clinton were to win the presidency and persuade Congress to expand Medicare, policy experts say. Clinton supports allowing people to buy into the federal health program for senior citizens and those with disabilities at age 55, a decade earlier than usual.

The potential for corporate backing for a Medicare expansion likely would depend on how a future president and Congress shaped such a proposal. Clinton’s platform doesn’t spell out the details. America’s Health Insurance Plans declined to comment, saying trade group officials are waiting for more information.

Any expansion of Medicare could provide another source of customers for the rapidly growing insurer-run Advantage plans, said Tricia Neuman, director of Medicare policy at the nonprofit Kaiser Family Foundation. Advantage plans next year may cover almost 20 million people, or about one in three people enrolled in Medicare, up from 6.9 million in 2000, according to the most recent report from the program’s trustees.

"It’s hard to see how it could not result in a boost in Medicare Advantage enrollment" if the Clinton proposal were to become reality, Neuman said. "To opine further gets difficult because it’s not clear who would be eligible to enroll, what the circumstances are, whether they would receive subsidies."

A Medicare expansion also might appeal to companies struggling with the health costs for their older workers and younger retirees, said Geoffrey Joyce, director of health policy at the University of Southern California’s Schaeffer Center. Some firms might offer less generous coverage, seeking to shift these costs toward an expanded federal program, he said. And some older workers might opt to leave jobs that they would otherwise remain in due to the prohibitive cost of buying insurance on their own.

"Employers are the ones who would benefit the most," Joyce said. "They would be the big winners in this."

A Medicare expansion could trigger a "dramatic change" for employers, workers and retirees, agrees Scott Harrington, a professor who studies health insurance at the University of Pennsylvania’s Wharton School.

"The details would be very, very important" in making a serious assessment of a Medicare expansion, Harrington said, citing concerns about how much this could cost the federal government. "It all gets very complicated."

However, the odds against a Medicare expansion have risen with the creation of health insurance exchanges through the 2010 overhaul (PL 111-148, PL 111-152). Democrats for many years floated ideas for expanding Medicare, including ultimately unsuccessful discussions held during the crafting of the 2010 law. Clinton was the co-sponsor of a 2001 Senate bill that would have let certain people opt into Medicare at age 62. In 1998, the administration of her husband Bill Clinton proposed allowing uninsured people as young as 55 to buy into Medicare.

"It’s a different context because the world has changed quite a bit," Neuman said. "The goal then was to provide health insurance to people who had no other source of coverage."

USC's Joyce said Clinton's Medicare proposal appears to be a response to her rival for the Democratic presidential ticket, Sen. Bernie Sanders, I-Vt. Sanders pitched a "Medicare for all" approach, calling for a federally administered single-payer health program.

Republicans, in contrast, support a shift toward a system in which the federal government provides capped subsidies to help older Americans buy insurance. And the 2016 GOP platform suggests setting "a more realistic age for eligibility in light of today’s longer life span," while sparing those nearing retirement from sudden changes.

Effect of Exchanges

Joyce said the only reason for Democrats to push for lowering the Medicare age would be a grim outlook for the new health exchanges. Insurance giant UnitedHealth Group on Tuesday confirmed that its losses on policies will lead it to participate in no more than three marketplaces next year. The company, which already has announced plans to scale back its participation in exchanges, cited concerns about the health of these customers.

But Joyce he expects insurers to adapt to the new market.

"The industry will work out the kinks and find ways to make more money" on the exchanges, Joyce said. "It’s a viable market that will stabilize over time."

Still, the experience with the exchanges may make some companies leery of a Medicare expansion, despite the growth opportunities, said insurance industry consultant Robert Laszewski, president of Health Policy and Strategy Associates. Companies could look to sell more supplemental Medigap policies as well as Advantage plans if younger people could participate in Medicare, he said.

But insurers "would be very worried that only the sickest people would buy into the new program," which would lead to "a poor profit picture more like Obamacare than the over-65 market now," Laszewski said.

Wharton's Harrington contended an expanded Medicare program might actually attract wealthier participants, those who don't get financial aid if they purchase insurance through exchanges.

"I don’t see why it would necessarily produce a lousy risk pool," Harrington said. "It could be a nice option probably for higher-income people who aren’t eligible for subsidies."

Allyson Y. Schwartz, president and chief executive of a coalition of supporters of insurer-run Medicare Advantage plans, said middle-aged consumers might gain through an expansion.

"Preventive, coordinated care, and enhanced benefits offered under Medicare Advantage would be an attractive option for those between 55 and 65 who are not currently eligible," said Schwartz, a former Democratic congresswoman from Pennsylvania, who leads the Better Medicare Alliance. "There is a lot more we would need to know to determine the impact and how this would practically work within Medicare Advantage."

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