Hillary Clinton's 'Medicare for More' has both pros and cons, studies find

The Democratic presidential candidate’s campaign proposal would make uninsured Americans eligible for Medicare at age 50 or 55. Whether that will be financially advantageous is a matter of some debate. 
By Susan Morse
10:42 AM
Hillary Clinton Bernie Sanders Donald Trump Medicare for More campaign

Hillary Clinton has been campaigning on her Medicare for More proposal to give Americans younger than age 65 the option to buy into the Medicare program since first announcing it this month. And now a study has looked at the plan’s upsides and downsides.

The Democratic presidential candidate proposes allowing middle-aged Americans, starting at age 50 or 55, who are currently uninsured, or who have coverage through private plans or the Affordable Care Act marketplaces, to become eligible for Medicare.

Experts have since speculated about how it would align with existing insurance coverage options.

Avalere said in a report that the cost to beneficiaries could be higher if they bought in at a younger age, mainly because Medicare offers no financial out-of-pocket cap on services.

Also, consumers receiving coverage through the exchanges may get savings from premium and cost sharing subsidies. At this time, it is not clear to what extent these subsidies would be applied to Medicare coverage under Clinton's plan, Avalere said.

Medicare could provide healthcare more cheaply than private insurance due to the sheer size of its pool of beneficiaries, however, and having younger workers and retirees help fund the program through premiums might also help offset the higher costs Medicare incurs to care for the oldest and sickest beneficiaries, according to BenefitsPro.

Many employers would welcome the prospect of no longer having to provide coverage for their oldest employees and retirees, according to BenefitsPro. Companies that offer coverage to retirees under the age of 65 pay an average of $13,000 for the plans, according to a Mercer study, BenefitsPro said.

According to Mercer, the percentage of employers that offer pre-Medicare retiree health plans has dropped from 46 percent in 1993 to 28 percent, and those that offer some type of health benefit to Medicare-eligible retirees has  declined from 40 percent to 21 percent.

An estimated 7 million, or 11 percent of those age 50 and over remained uninsured as of 2014. Another 5.9 million, or 9 percent were insured in the individual market, according to the Avalere study.

Pre-Medicare aged adults have been one of the demographic groups most attracted to the exchange market, Avalere said. In 2016, nearly half, or 47 percent of exchange enrollees are 45 or older, with 26 percent 55 and older.

"Despite exchanges attracting millions of Americans 50 and over, millions more remain uninsured. While individuals are likely to stick with employer coverage if they currently have it, this proposal may give consumers another option to become insured," said Elizabeth Carpenter, senior vice president at Avalere. 

Avalere experts say it is not immediately evident that Medicare coverage would be a better option for all people over 50.

Traditional, fee-for-service Medicare tends to offer a broader network of providers and lower deductibles relative to unsubsidized exchange products.

However, consumers enrolling in Medicare may have higher costs and more benefit limits than with exchange products.

Both employer and exchange plans feature an annual cap on how much consumers could pay in out-of-pocket costs. Medicare has no similar out-of-pocket cap, so beneficiaries with high healthcare costs could end up paying more.

Medicare charges beneficiaries 20 percent of the total cost for all Part B services, which includes physician visits, lab tests, physician-administered drugs, and durable medical equipment. While some beneficiaries purchase Medigap policies to reduce these costs, those policies can be expensive--costing an average of $183 per month in 2010, Avalere said.

Drug benefits could be less generous under Medicare. While drug coverage varies widely by plan, formulary breadth in Medicare Part D plans is more limited than in silver exchange plans on average, the Avalere study said.

For instance, across 22 classes of commonly used drugs, formularies for exchange plans cover 85 percent of all drugs, while Medicare Part D plans cover only 70 percent.

"Consumers would need to weigh the relative benefits of exchange products compared to Medicare based on their particular situation," said Caroline Pearson, senior vice president at Avalere. "Due to the unique characteristics of the Medicare program, some individuals might experience higher costs or more limited drug coverage compared to other insurance options."

Twitter: @SusanJMorse

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