Democratic Presidential Nominee Joe Biden has two distinct plans to expand public health insurance access:
- allow “near seniors” — individuals between the ages of 60-64 — to enroll in Medicare and
- create a government health plan or “public option” for purchase on the Affordable Care Act (ACA) marketplaces.
The plan also makes tax credits more generous to help people — including near seniors — pay for insurance currently available through the ACA.
Under Biden’s proposal, near seniors could enroll in Medicare, keep their existing source of coverage, or get insurance through Biden’s proposed public option. The Vice President would enable near seniors to keep their existing insurance, including employer sponsored, because he would require employers to comply with age discrimination laws in their provision of benefits and prohibit them from excluding older workers from their plans.
Allowing 60-64 year-olds to Enroll in Medicare
By broadening Medicare eligibility, the Vice President’s plan is estimated to make the program available to an additional 23 million seniors, including 1.7 million previously uninsured seniors. Individuals age 60-64 who choose to enroll in Medicare would be covered by the same program with the same benefits, premiums and cost sharing responsibilities as existing beneficiaries age 65 and older.
Prior to the pandemic, lowering the Medicare eligibility age was not projected to substantially lower the number of uninsured seniors because older Americans have higher rates of coverage compared to younger adults. However, it may have more of an impact now because the pandemic caused many older workers to lose their employer-sponsored insurance. From March to April 2020, 2.4 million seniors ages 55-64 lost their jobs, and the unemployment rate for seniors age 55-64 increased from 3.4 percent in March to 8.8 percent in July.
Unemployed near seniors age 60-64 face a unique set of challenges in the pandemic: they are less likely than younger workers to be rehired, and they cannot retire early because they are not yet eligible for Medicare. Currently, unemployed near seniors who are not eligible for Medicaid can purchase private health insurance plans on ACA marketplaces. But because ACA plans are age rated and because private insurance has higher administrative costs and provider payments than Medicare, ACA plans are more costly than traditional Medicare. Biden’s plan to allow individuals age 60 to 64 to enroll in Medicare would provide a more affordable coverage option than the ACA marketplaces for many unemployed near seniors not eligible for Medicaid or for significant ACA subsidies.
In addition, the Biden plan would create a government “Medicare-like” health plan for people, including near seniors age 60-64, who don’t get insurance through their job, and individuals dissatisfied with or unable to afford their employer coverage. Biden would also automatically enroll individuals into the public option premium-free if they were eligible for Medicaid and if their state had expanded the program.
Strengthen the ACA
The ACA provides premium subsidies in the form of refundable tax credits for people with incomes between 100 and 400 percent of the federal poverty level. Individual’s eligible for the tax credit are currently limited to paying 9.86 percent of their income toward premiums. The Biden plan would remove the 400 percent income cap on tax credit eligibility and reduce the maximum percent of income spent on premiums to 8.5 percent. This would allow individuals with higher incomes to be eligible for a tax credit if their premiums accounted for more than 8.5 percent of their incomes. The tax credits would be made more generous by calculating them based on the cost of the higher tiered gold plan rather than the silver plan.
NATIONAL COMMITTEE POSITION
The National Committee has not yet taken a position on the Biden plan’s options for near retirees because there aren’t enough details to fully evaluate the proposal. However, the Vice President’s plan to lower the Medicare eligibility age to 60 avoids some of the problems that many of the congressional “buy-in” bills have. It doesn’t create a parallel self-funded program with its own risk pool, so there are none of the issues that might create inequities between the 60-64 age population and existing beneficiaries. Everyone is in the same Medicare program. In addition, it promises to pay for the increased cost through general funds, potentially mitigating concerns about Medicare trust fund solvency.
However, it is difficult to know without more detail about how the program is structured, what the impact of the Biden Medicare at age 60 plan will be on the Medicare risk pool and costs for existing beneficiaries. Additionally, because the Medicare program is less costly than private insurance, it should be attractive to healthy individuals currently using other forms of insurance. Some research on Medicare buy-in legislation suggests that allowing 60-64-year-olds to enroll in Medicare would bring younger and healthier people into the Medicare risk pool, lowering premiums for current beneficiaries. But whether this will be true for the Vice President’s plan to broaden Medicare eligibility is unclear. The additional availability to near seniors of the public option on the ACA exchanges combined with expanded subsidies adds another element of uncertainty about the attractiveness of Medicare to near seniors who might opt to stay in the exchanges under the Biden plan.
At the same time, the public option and ACA subsidies may provide “junior” seniors age 50-59 with stable insurance as they age and reduce their likelihood of entering Medicare with untreated chronic conditions, a phenomena which impacts both risk pool and program costs.
Medicare Advantage (MA) plans tend to enroll healthier enrollees, raising costs in the traditional program. As such, the Biden plan might accelerate the trend toward privatization of the Medicare program. In order to protect the viability of the traditional program, Biden’s proposal should be coupled with policies that would allow traditional Medicare to operate on the same playing field as MA, such as adding an out-of-pocket cap and dental, vision and hearing coverage to traditional Medicare. We further support equalizing payment between MA and the traditional program.
In addition, near seniors age 60-64 enrolling in Medicare should be guaranteed issue of private Medigap plans without regard to their health, to make sure they have equal access to the traditional program as well as MA plans.
The National Committee strongly supports ensuring that all Americans have health care coverage. Toward that end, we support improving the Affordable Care Act to make coverage more affordable. We will continue to evaluate other parts of the Vice President’s plan as more details are released.
Government Relations and Policy, October 2020