- When implemented alongside the Affordable Care Act, a Medicare buy-in option could result in more generous coverage and lower out-of-pocket spending for beneficiaries, according to a new Urban Institute brief.
- By paying providers typically lower Medicare payment rates, buy-in policies could significantly reduce overall healthcare spending, while federal spending would only modestly increase. The basic buy-in policy analyzed by researchers would overall lower U.S. health spend by $1.8 billion, though it would only slightly lower the country's uninsured rate.
- The U.S. even before COVID-19 was facing a health spending crisis, with policymakers on both sides of the aisle struggling to find solutions to skyrocketing healthcare costs. A Medicare buy-in is not a specific prong of President Joe Biden's health policy agenda, but there are currently two Medicare buy-in proposals in Congress designed to build upon the ACA.
Passage of the ACA greatly expanded the availability of low-cost coverage, including subsidized plans on the individual exchanges and increased access to Medicaid. It substantially reduced the need in the U.S. for a Medicare buy-in, an idea that has bounced around Washington since the mid-1990s.
However, key coverage gaps remain, and U.S. health spending continues to snowball, reaching $3.8 trillion in 2019, according to CMS.
A Medicare buy-in program is a largely incremental reform to try and get a handle on, especially compared to more polarizing proposals like "Medicare for All." It would allow qualifying people who are currently ineligible for the program to buy a Medicare-like insurance plan.
Two recent Medicare buy-in proposals, one introduced in the Senate sponsored by Sen. Deborah Stabenow (D-Mich.) and another in the House sponsored by Rep. Brian Higgins (D-N.Y.) would create a competing Medicare-like insurance for adults aged 50 to 64, taking advantage of lower Medicare payment rates for providers in a bid to lower costs without restricting provider networks.
The plan is similar to Biden's proposal to lower the age of eligibility for Medicare, though the new president only floated lowering it to 60, not 50. Biden also supports creating a Medicare-like public option available to everyone.
In a previous analysis published in December, Urban Institute researchers found introducing a Medicare buy-in option would only modestly affect health coverage and spending, given existing ACA subsidies. The policy would enroll an estimated 2.1 million Americans, mostly shifted over from the ACA marketplaces or nongroup coverage. Of the estimated 5.6 million uninsured older adults, an estimated miniscule fraction — only 176,000 — would opt into the buy-in, suggesting the policies have limited potential to expand coverage.
That's in line with past research finding older adults that are uninsured tend to have very low incomes or be ineligible for subsidized coverage, such as noncitizens.
However, a Medicare buy-in could significantly lower national health spending, researchers found. Expected healthcare spending increases with age, so older adults are at a significantly higher risk of more healthcare costs. A Medicare buy-in could also feature out-of-pocket maximums to limit cost-sharing obligations to further protect beneficiaries.
Critics of the policy argue buy-in policies might increase premiums somewhat in the ACA marketplace plans, not reduce them. By attracting older adults to the buy-in who, with their higher premiums, were potentially subsidizing younger enrollees' claims, the option could be destabilizing for the marketplace.
The Urban Institute analysis found, however, that the buy-in would almost definitely lower participating adults' out-of-pocket costs. Though premiums could be higher, the coverage is more generous, meaning less out-of-pocket cost sharing and more value overall.
Researchers estimate out-of-pocket spending among adults switching from marketplace coverage to the buy-in plan would fall from $3,414 to $1,528, and premiums would fall from $6,430 to $6,230.
However, like Biden's notable healthcare proposals, a Medicare buy-in is politically unpopular among some moderates and most conservatives, along with a majority of the healthcare industry. For providers, the loss of commercial payments from older adults, who consume more health services, could be difficult for cash-strapped hospitals or clinics operating under fee-for-service payments.