Medicare at 60: Playing Musical Chairs with Coverage Sources

President Biden embraced both a “public option” and lowering the Medicare eligibility age as part of his presidential campaign. However, like most of this administration’s health policy agenda, these proposals have faded from public discourse over the past year and a half. But this week, the Congressional Budget Office (CBO) issued a analysis to lower Medicare eligibility to age 60, and there are some interesting takeaways and important caveats.

CBO’s frontline numbers are relatively straightforward. Lowering the Medicare age to 60 would increase the federal deficit by $155 billion over six years (2026-2031), add 7.3 million people to Medicare, reduce the number of people on Medicare by 3.2 million employer-sponsored insurance (ESI), would move 1.8 million people from Medicaid to Medicare, and reduce the uninsured population by about 400,000 in 2031 compared to the CBO’s baseline projections. So here are some observations.

First of all, this is all fantasy. This is not a criticism – making predictions is difficult. Yet the current CBO baseline was released in July 2021 and made what were in retrospect overly optimistic assumptions about how the economy would recover from the pandemic.. The CBO will soon release an updated baseline, which should better reflect a less rosy-than-expected economic outlook. This analysis would certainly have been more useful if it had been modeled against reference assumptions more closely related to reality.

Second, the deficit forecasts seem plausible and are consistent with a analysis the American Action Forum (AAF). The AAF projected last fall that lowering Medicare eligibility to 60 would increase the deficit by $380 billion over 10 years and by about $211 billion over the same six-year period as the CBO estimate.

Third, Medicare expansion will not have a significant impact on the number of Americans covered by insurance; instead, in CBO’s analysis, it just shuffles those that already have coverage. This is a recurring theme in recent policy proposals supposedly aimed at expanding coverage.

Fourth, building on the previous point, as much ink spills over the estimated 28 million Americans who remain without insurance coverage (but not always without coverage options), policy proposals related to coverage seem increasingly aimed not at increasing coverage, but at consolidating it. Expanding Medicare, lifting income caps on premium tax credits, and making them more generous are all helping to reduce the number of Americans enrolled in ESI and unsubsidized out-of-group coverage. People between the ages of 60 and 64 would not have to give up their ESI, but failing to enroll in Part B and Part D when they become eligible risks incurring future penalties. Additionally, CBO expects many small employers to drop insurance coverage for people newly eligible for Medicare, removing the choice of whether to stay in ESI or switch to Medicare.

Policies that primarily shift people from private health insurance to federal programs are effectively a single-payer backdoor approach. It may not be a single federal program, but if everyone is ultimately covered by a patchwork of federal programs, it produces much the same result. In the final analysis, adding $155 billion to the deficit to play insurance coverage musical chairs doesn’t make much practical sense.

Chart review: Distribution of plan choices in the health insurance market, 2022-2032

Margaret Barnhorst, Health Care Policy Fellow

Earlier this week, the American Action Forum’s Center for Health and Economy (H&E) released its annual benchmark estimates, which include 10-year projections of health insurance coverage, federal budget impacts, choice plan and premiums for Americans under 65, based on current legislation. As health care premiums and costs rise over the next decade and consumers with less generous subsidies adjust to higher premiums, H&E believes that the plans chosen in the health insurance market will turn to lower cost options. As shown in the table below, Silver plans will continue to make up the majority of the Marketplace throughout the budget window, as cost-sharing benefits are only available to Silver plans on the Marketplace, although the Silver plan enrollment or a percentage of all Marketplace plan selections. will decrease. In 2022, 65% of all Marketplace plan selections were Silver, 32% were Bronze, around 3% were Gold, and less than 0.2% were Platinum. Plan selections for the higher-cost Gold and Platinum plans will see virtually no change over the next decade, but as time passes and premiums increase, Silver plan enrollment will drop to 56% of all Marketplace plan selections in 2032, while Bronze plan enrollment will increase. at 42 percent.