Apr 28, 2021 - Health

Lowering the Medicare age could save employers a lot of money

Average monthly health spending per person by age group
Reproduced from KFF; Chart: Axios Visuals

Employer plans spend more money each month, on average, on enrollees ages 60-64 than Medicare spends on people between 65 and 74, a new KFF analysis found.

Why it matters: Shifting these high-cost enrollees to Medicare would likely save employers a lot of money. But it would also mean payment cuts for hospitals and doctors.

The big picture: Private insurance often pays several times more than Medicare for the same services. The gap in rates is growing.

  • That means employer coverage keeps getting more expensive — and that money ultimately comes out of the pocket of employers, employees and taxpayers.
  • People generally use more health care services as they age, making the oldest employees the most expensive for employers to cover — and among the most lucrative patients for doctors and hospitals.

Driving the news: Some Democrats, including Sen. Bernie Sanders, are pushing to lower the eligibility age for Medicare from 65 to 60, or even lower.

  • Providers strongly oppose the measure, partially because they say Medicare rates are too low.

By the numbers: Employer health plan spending would plummet if it no longer included older enrollees, a second KFF analysis found.

  • If everyone 60-64 who is enrolled in large employer plans switched to Medicare, employer plan costs would drop by 15%.
  • If everyone 55-64 left their employer plans, the costs would decrease by 30%. And if all adults 50-64 left, costs would decrease by 43%.

Yes, but: Not every newly eligible person would decide to ditch their employer plan, even if they had the choice.

The bottom line: "These two findings suggest that lowering the eligibility age of Medicare could have a downward effect on total national health spending," the KFF researchers conclude.

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