Here's why the "Medicare buy-in compromise" isn't what it's touted to be...

[regnaD kciN]

On the surface, I should be one of those happiest about the proposed Medicare buy-in. After all, according to current reports, the plan would be phased-in in 2011, just when I turn 55. Even though there are reports that such an option wouldn't be available through the exchange or covered by subsidies (and thus would be prohibitively expensive) for the first three years, after that, it would seem to be a no-brainer, right.

Wrong. And here's why it works out to a lot less than meets the eye:

When looking at people who might become newly-eligible for Medicare, it breaks down largely into the following groups:

A) Unmarried individuals over 55.

B) Couples, both over 55, with no dependent children.

C) Couples, with one partner over 55, with no dependent children.

D) Couples with dependent children, both over 55.

E) Couples with dependent children, with one partner over 55.

Those in groups A and B would realize an immediate gain through Medicare.

Those in group C would receive a slight benefit, but the under-55 partner would still be mandated to purchase private insurance. Therefore, any savings would be the difference between one individual plan plus Medicare, versus a family plan (since a family plan generally works out to the same as two individual plans). So, if Medicare, say, resulted in a 50% reduction in cost over a private individual plan, the overall reduction for the couple would be 25%.

When you get to group D, things would begin to get tricky. For, although both parents could go on Medicare, they would still be mandated to provide coverage for their dependent children. If they only had one such child, the savings would be the difference, if any, between two Medicare premiums and an individual plan versus a private family plan. If, as in the result above, the Medicare premiums were half the cost of an individual plan, the difference would be a wash. If Medicare was less than half the cost of the individual plan, you'd get a slight cost savings. If more than half the cost, it wouldn't make financial sense to choose Medicare rather than a private family plan. And, of course, if the hypothetical couple had more than one dependent child, Medicare would make no sense whatsoever, as it would take a family plan to cover the children alone, and having the parents on it as well would add nothing to that cost, while buying the family plan for the children plus two Medicare plans for the adults would be financial insanity.

For those in group E, it's even more clear-cut: the under-55 partner and even one child would require the purchase of a family plan in addition to Medicare coverage for the over-55 partner, so there would be no point to signing up for the latter instead of just keeping the over-55 partner on the same plan.

(Anyone care to guess to which group I belong?)

So, in short, this option would be most useful to individuals and childless couples over 55, and practically useless to those with dependent children. Of course, in the old days, few people over 55 would have dependent children but, with more and more women choosing to have kids late -- into their early and mid-forties -- and with more married/partnered couples still having the husband older than the wife than vice-versa, it would not at all be unusual for people in that age group to have at least one dependent child. And, if you look at the spectrum of 55-64, you'll find that most of those in the groups that would benefit the most from such a plan -- those in groups A and B -- would likely be quite close to 65 in any event, while those in lower parts of the age bracket would be more likely to fall in groups D and E, and have little or no benefit in opting for Medicare instead of sticking with the same private plan they'd be mandated to obtain for the rest of the family.

If, as part of this plan, Medicare were also offered to children and persons under 21, and/or spouses of those eligible to receive it due to age, such a plan might truly be a big step forward for health care in America. But, as things stand, lowering the Medicare age to 55 appears to be more of a "feel-good" gesture to progressives bitter over the loss of the public option, rather than something that will be of tangible benefit to the American public.

[cynatnite]

1. Link please...

I didn't know the specifics were already out.

[regnaD kciN]

3. A link to what...?

I'm only mentioning the general outlines of the plan that have been mentioned today. The same problem applies to any plan that opens Medicare to the 55-64 age bracket. The rest is just elementary math.

[dysfunctional press]

2. how much will the medicare 'buy-in' cost the people under 65?

i don't see that mentioned anywhere in your post, and that is definitely a HUGH factor when considering potential savings for customers.

[regnaD kciN]

5. No one knows yet...

I did read one source saying that the Medicare buy-in would not be eligible for subsidies or sold through the exchange for 2011-2013, but then would be after 2014; and that would make the buy-in extremely expensive for the first three years, but I have no idea if it is true or not.

Since I don't know what it will cost, I expressed it in my OP as hypothetical percentages of the cost of a private premium: half as much, more than half, less than half. Obviously, if the buy-in is very low-cost, it will be more of a benefit to more people than if it were only slightly less than private insurance. But the point still holds that, if you have to buy a private family plan anyway to cover the non-Medicare-eligible members of your family (i.e. if there's more than one), the buy-in makes no sense as opposed to having yourself be covered by that family plan as well. For instance, even if a private family plan were to cost $1,000/month, and a Medicare buy-in only $1/month, if you were in groups D or E of my original post, your monthly cost would be $1,000 just relying on a private family plan, and $1,001 if you opted for Medicare for yourself. It would make no sense to do so.

[zeos3]

4. It depends on the cost of the buy-in and the cost of private insurance.

I don't see things being that tricky for groups D and E.

Your examples seem to assume a similar premium for both parents and children. Are we talking employer sponsored group plans or individual plans?

If we're talking individual plans, it is much cheaper to insure a child (even in their 20's) than a 55 year old adult. With this being the case, I don't see what the problem for groups D and E would be (depending on the buy-in cost).

[regnaD kciN]

6. I'm basing my private-insurance estimates on the FEHB plan...

...since that's supposed to be the model for the "non-profit" system managed by OPM.

Currently, for each insurer and level of plan included in the FEHB system, there is one flat-rate premium for individuals (regardless of age), and one for families (which generally works out to twice the price of an equivalent individual plan from the same insurer). Therefore, under that system, if you're in group D or E, and have to cover two non-Medicare-eligible members of your family (say, a spouse and dependent child), you're either going to have to buy two individual plans or a family plan -- so it makes sense to go with the latter and have it cover you as well, instead of paying for Medicare in addition to your family coverage.

I can see some cases where it might be possible to work the system to your benefit. For example, if you're a single parent with a couple of dependent kids, it might well make sense to choose Medicare for yourself and cheap age-based plans for your kids. But, if your spouse is one of those needing coverage, and isn't old enough to be Medicare-eligible him- or herself, unless you're a celebrity married to a much-younger "trophy wife" or "boy toy" ;-) , your spouse is probably going to be somewhere in the 45-54 range...which means that opting for an age-based individual plan for them is probably going to be prohibitively expensive, no matter how cheap your kid's coverage might be, and it would make far more sense to grab an option like the non-age-based FEHB system, if such is available.

[zeos3]

7. I see...

based on that model, you're right.

My guess is your analysis would hold true for most union based health insurance.

My comments in the previous post were with regard to typical non-union employer sponsored health plans and individual plans. In these cases, the premium is based on the age/health of each individual member so people in this situation would probably see a benefit (again, depending on the cost of the buy-in).

[fasttense]

8. My problem with it is what is going to control the cost of MANDATORY health insurance?

I thought the public option was suppose to do that? So, what's controlling the cost now that the most frequent users of health care are removed from the private sector and picked up by the gubermint?

What will stop CEOs from raising, and raising, and raising premiums on people for little to nothing in return?

It's the MANDATORY health insurance that is total BS. It will force a 20 something young girl to pay thousands of dollars for health care insurance that does NOT cover contraceptives, abortions or dental. What's the use of buying crap like that? For a young girl, it will be a total waist of her hard earned money. And why can a 56 year old man buy viagra under their health insurance but the young girl has to pay out of pocket for contraceptives or an abortions.

It's a giveaway to health insurance corporations and their kings, I mean their CEOs.

[blindpig]

9. Divide and conquer

55-65 is a big demographic and they are trying to buy us off to the detriment of the majority. Of course, it's a goldmine for the insurance companies.

Fuck that.

[Ms. Toad]

10. I agree with your analysis

in terms of the details of how this would play out. And note that since that is essentially how Medicare operates now - that points out a potential challenge for people currently on Medicare that may not be currently addressed. Spouses and dependent children of individuals over 65 are probably required to purchase private insurance under the bill.

I think making Medicare available to 55 and over is a good thing - even it it isn't quite as wonderful as it seems. If you have insurance for your family currently, you are no worse off (and may be better off) with another option. If you are currently 55 or over, and have no options for insurance, once the plan is phased in it will be very good for you. Your added suggestions are good, but it is still a step in the right direction even if those additions are not made.