Congressional Report Finds Medicare Buy In Program Would Lower Costs For Americans

Friday, December 26, 2008
Ayinde O. Chase - AHN Editor Santa Monica, CA (AHN) - A Congressional Budget Office report comparing health care reform options found that a plan to allow Americans to buy into Medicare before turning 65 would lead to more people with health coverage and lower costs than private insurance coverage. The report comes at a time that seniors face a Dec. 31 cutoff date to enroll or switch plans.
The CBO studied a limited Medicare buy-in option for those between 62 and 64 years old.
According to estimates from the CBO the annual premium for single coverage in 2011 would be about $7,600 including drug coverage. While comparatively, a private insurance policy premium for a 64-year-old can easily cost $12,000-$16,000 a year not including copays and deductibles and after excluding coverage for those with even minor health problems.
In 2006, Medicare spent about $10,200 on average per beneficiary, which currently includes an older and sicker population than that envisioned by the buy-in program.
"The report emphasizes an important point for policy makers to keep in mind as they grapple with fixing our nation's health care: Medicare provides more affordable coverage because it eliminates the waste and profiteering of the private market," says Jerry Flanagan of Consumer Watchdog. "Polls show that seniors are also happier with their coverage than those of us with private insurance policies because they have better access to health care."
Monthly rates on many current supplemental policies, such as Medicare Advantage and prescription drug coverage however are poised to rise next year and, in some cases, more than double. Health insurers say the rise in costs is an effort to offset a sharp rise in medical costs. Insurers also are hiking copays and deductibles, shifting more health care expenses onto consumers.
However, the CBO report did find that a Medicare buy-in program would lead to higher than expected Social Security payments because, due to the program, more Americans over 62 would retire earlier than without the program. Some consumer groups estimate those expenditures, which the CBO found would be "minimal" over the long term, could be erased if the program were expanded to allow any American to buy-in to Medicare regardless of age.
In 2006 many insurers lowered their rates, the first year Medicare added drug coverage, in an attempt to attract seniors to their policies. Pamela Alexander director of wellness services at the Detroit Area Agency on Aging says, "Now, they are going up on their rates because they got people involved in their plans, and a lot of people can't afford it."
In a Detroit News report, Dale Snyder says he was astonished to see his monthly premiums shoot up in 2009, after dropping this year. Snyder, a 70-year-old retiree whose Medicare Advantage policy is under the Blue Care Network, said he was paying $33 a month when he first signed up for the plan three years ago. Then, his rates dipped this year to about $26 a month.
Now, they're going back up again to $64 a month for 2009.
"My god, that's almost a 150 percent increase," said Snyder, a former manager at a plastics company. "It was a shock."
Comparatively an analysis done by the CBO found that if Medicare also covered the young, the estimated cost per person would plummet.