Dropping the Medicare age to 60 also requires...

Subscribe to xpostfactoid

130 House Democrats have co-sponsored a bill introduced on September 3 by Pramila Jayapal, the Improving Medicare Coverage Act, that would drop the Medicare eligibility age to 60 -- simply and cleanly, with Medicare offered on the same terms at age 60 as it now is at age 65, within six months of enactment. That's the headline. But the bill does something else that's arguably more consequential. 

Without other changes to Medicare, dropping the eligibility age to 60 would be a mixed blessing at best. That's because for 60-64 year-olds with income below 200% of the Federal Poverty Level ($25,520 for an individual, $34,480 for a couple in 2021), Medicare in its current form would be considerably more expensive than ACA marketplace coverage (as enhanced through 2022 by the American Rescue Plan Act in enacted in March) -- excepting for those who are dually eligible for Medicaid and Medicare. While just over a quarter of the U.S. population is in households with incomes below 200% FPL, about half of the uninsured have incomes below that threshold.  

Jayapal's bill changes the equation by making all Medicare enrollees with income below 200% FPL eligible for a new Medicare Cost Assistance Program that would zero out premiums, coinsurance and deductibles for Medicare Parts A (hospital)  and B (physician and outpatient), and also subsidize Part D prescription drug coverage (covering the entire Part D premium and reducing prescription copays to single-digit dollar amounts).  The bill would also move administration of these benefits from state Medicaid programs to Medicare, with the federal government assuming 100% of costs now shared with states.

The Medicare Cost Assistance benefits in Jayapal’s bill are equivalent are equivalent to those currently offered in  the Qualified Medicare Beneficiary (QMB) program, which pays enrollees' Medicare Part A and B costs in full. The QMB program, the strongest of a hodgepodge of four Medicare Special Programs (MSPs) available to enrollees with low incomes and negligible assets, has a current income eligibility limit of $1,094 per month for an individual and $1,472 for couples, along with asset limits of $7,970 for an individual and $11,960 for couples (raised by some states).  Jayapal's bill would roughly double the income limits, to about $2,147/month for an individual and $2,903 for a couple -- and, importantly,  void the asset limits.  

The new cost-sharing benefit would replace three of the four existing MSPs, leaving in place one existing MSP subsidizing Medicare Part A for working disabled people under age 65.  A simplified application would replace the Byzantine and often onerous application process for the other MSPs and Part D Extra Help.

Most beneficiaries would be over age 65

Providing a Medicare benefit that covers all premiums and almost all out-of-pocket costs to all Medicare enrollees with incomes up to 200% FPL would be a huge boon to millions of people over age 60 (the new eligibility age established by the bill). As of 2018, 12.2 million Medicare enrollees had some form of dual eligibility, and 8.7 million are "full" dual eligibles, with all or almost all costs paid (some are subject to small Medicaid copays). Almost 40% of dual eligibles are on disability Medicare.  Only 5.3 million seniors are full dual eligibles. 

According to KFF, 6.9 million Medicare enrollees (12.3% of all enrollees) have incomes below 100% FPL, 11.0 million (19.5%)  have incomes in the 100-200% FPL range.  While some enrollees in the 100-200% FPL range do obtain partial or full  dual eligibility, most don't. Eligibility for the free or near-free Medicare benefit would also extend to perhaps a quarter of the nation's roughly 21 million 60-64 year-olds rendered newly eligible for Medicare by Jayapal's bill.

At present, Medicare enrollees who lack dual eligibility pay a minimum of $148.50  per month (the Part B premium for all but the wealthiest 5% of the population) for full coverage, via private Medicare Advantage plans that include Part D prescription drug coverage at no additional cost. According to KFF, almost two thirds (65%) of 26 million Medicare Advantage enrollees are in such plans, which also may include some measure of dental, vision and hearing coverage, along with other extras, such as gym memberships. The tradeoff is a limited provider network -- and networks are often narrow in MA plans that charge no additional premium. 

Perhaps the most valuable extra benefit provided by Medicare Advantage plans is a yearly cap on out-of-pocket (OOP) costs, which averages $5,091 for in-network services, and $9,208 for combined in-network and out-of-network services (the highest allowable caps are $7550 for in-network and $11,300 for OON). Conversely, the most glaring weakness in traditional, fee-for-service Medicare is the lack of an OOP cap (while the primary advantage over MA is a nearly unlimited choice of providers). 

While most FFS Medicare enrollees plug that hole with a Medigap policy, MA plans provide the only means to cap costs for those who are not dual eligibles but find Medigap coverage unaffordable. Medigap premiums, added to Medicare premiums for Parts B and D, generally come to $300-400 per month per person.  Jayapal's bill might change that equation for many Medicare enrollees who feel they cannot afford Medigap (or whose former employers don't fund it, or an employer-sponsored equivalent).

Jayapal's bill would wipe out virtually all costs for care under traditional (fee-for-service) Medicare at ages over 60 and incomes up to 200% FPL (as well as for enrollees in disability Medicare below that income threshold). The primary remaining selling point for the Medicare Advantage Special Needs Plans (SNPs) designed for current dual eligibles, which have limited (and often narrow) provider networks, would be additional benefits added at no cost, such as dental, vision, and hearing. Meanwhile, though, the budget outline that passed the House last month includes adding some form of those benefits to Medicare. While it's uncertain what new benefits, if any, Democrats will be able to get through Congress this fall, the dental/hearing/vision benefits are a core goal -- more so than dropping the eligibility age to 60.

A modular approach to single payer?

Jayapal is also lead sponsor of the Medicare for All Act, which would establish a national single payer healthcare system.  While the Improving Medicare Coverage Act introduced last week is obviously far more limited (though also probably too good to pass), it suggests to me a modular approach to getting to a transformation of U.S. healthcare. It might work like this:

• Extend premium-free and cost-sharing-free FFS Medicare coverage to all adults over age 60 with incomes up to 200% FPL.
• Extend the program to all adults with incomes up to 200% FPL in the 12 states that have refused to enact the ACA Medicare expansion (finding a way to cover people in this "coverage gap" is another high-priority Democratic goal).
• Extend the program to all adults with incomes under 200% FPL.
• Extend the program to everyone.

It's interesting that the press release introducing this bill focuses almost exclusively on  dropping the Medicare eligibility to 60 and barely alludes to all but eliminating premiums and out-of-pocket costs for enrollees all the way up to 200% FPL.  Of the six sponsoring/cosponsoring members who are quoted in the release, only one, Haley Stevens, alludes to the low income benefits, asserting, "This bill reimagines programs that provide financial assistance to cover the costs of Medicare and eliminates barriers that prevent eligible seniors and people with disabilities from accessing much-needed care.” 

Given the Hunger Games struggle that Congressional Democrats are enmeshed in to select and pass some fragment of the social spending priorities outlined in their budget framework, it's highly unlikely that dropping the Medicare eligibility age to 60 will make the cut. On the other hand, the idea is popular, its backers are savvy legislators, and so, HuffPost's Jonathan Cohn suggests, "It’s not crazy to think Sanders, Jayapal and their allies would find some way to get some version of the idea into a final spending bill." 

What this discussion should make clear is that dropping the eligibility age is untenable without improving the benefit for low income enrollees, who can get coverage with zero-to-very-low premiums and relatively low OOP caps in the ACA marketplace.  Is it possible, however, that some fragment or echo of the cost assistance benefits for low-income enrollees in this bill will make it into the final mix?  That might be a more interesting and fruitful outcome.

--

My thanks to Josh Schultz, a veteran of the Medicare Rights Center and now at Softheon, for helping me tease through the cost assistance provisions of this bill.

Subscribe to xpostfactoid

Photo by Kampus Production from Pexels