Urban Institute Proposal for "Buy-In" to Medicare Finds Traction in Congress

The Republicans may have found the key to winning approval of the proposal to extend the Medicare-eligibility age to 67, but only if 65- and 66-year-olds are allowed to “buy in” to Medicare.

According to Politico, the idea originated from an Urban Institute paper, “Can Medicare Be Preserved While Reducing the Deficit?“ ”Individuals would pay the full cost of actuarially fair premiums for Medicare hospital, physician and drug coverage,” Politico’s David Rogers writes. “This could run about $10,000 annually, requiring assistance for people with lower incomes. But that cost estimate is considerably less than what private insurance plans would charge.”

“Allowing 65- and 66- year-olds to buy into Medicare, but requiring them to pay more than they do today (with income protections) would mitigate many of the problems of simply raising the age of eligibility,” writes the Urban Institute’s Robert Berenson, John Holahan, and Stephen Zuckerman in the paper. “Middle- and high-income individuals would pay the full actuarially fair premium for their age cohort, not the significantly lower Part B and Part D premiums of today. Unlike today, the lowest-income individuals would have access to Medicare at no cost with full cost-sharing subsidies. In addition, the ACA subsidy schedule would be used to limit premiums as a percentage of income for others with incomes below 400 percent of the federal poverty level (FPL).”

The proposal has found some traction among Republicans and Democrats, Politico reports. Where it may not have found much interest is in the Urban Institute leadership. When representatives of the Urban Institute testified before Congress last month, they pooh-poohed the proposal to extend the Medicare eligibility age, saying in prepared remarks that it “would actually raise total health care costs.” While speaking before the House Committee on Energy Commerce’s Subcommittee on Health, the Urban Institute’s Judy Feder and Paul Van de Water said, “Such measures might save federal dollars, but they shift risk onto beneficiaries who can ill afford to pay them.”