Reducing the Enrollment Age for Medicare

According to a brief from the Peterson-Kaiser Family Foundation (KFF) Health System Tracker, employers could spend up to 43 percent less on healthcare if Medicare’s eligibility threshold were reduced to 50 years of age and if uptake were universal.

Crunching the Numbers

KFF researchers used data from medical claims from the 2018 IBM Health Analytics MarketScan Commercial Claims and Encounters Database and microdata from the CDC’s 2019 National Health Interview Survey Sample Adult Questionnaire.

Transferring employer coverage to Medicare would certainly decrease costs to employers and consequently increase costs to the federal government, although research reveals total healthcare spending would decrease for those in the 60 to 64-year-old bracket.

The theory goes that having a smaller and healthier group of Medicare enrollees would reduce total costs. Also, Medicare pays providers at a lower rate than private insurers and those cost reductions would begin to add up.

The KFF data reveals that lowering Medicare’s eligibility threshold to the aforementioned 60 to 64-year-old range would turn up savings for employers of about 15 percent. The wider the range, the more employers save on healthcare costs overall.

Employers could save 30 percent on healthcare costs if the threshold were moved to those aged 55 and older, for example.

Large Group Benefits

In instances where large group healthcare plans are involved, as an employee ages the share of enrollment declines. Consequently, the share of healthcare spending grows.

Those between the age of 50 and 54 make up for about nine percent of large group healthcare enrollment, while those aged 55 to 59 account for eight percent. Those in the 60 to 64-year-old grouping range for seven percent of overall large group healthcare enrollment. As older employees transition to Medicare, the younger group accounts for the most enrollment in large group healthcare plans.

If all eligible employees shifted to Medicare, savings would be substantial for employers. But enrollment is a major proviso, as research confirms. At current rates, about two-thirds of senior citizens still working choose Medicare coverage over employer coverage. Those numbers would have to increase in order for employers to enjoy maximum savings.

Easing a National Burden

In theory, any savings from these threshold decreases could lead to reductions in things like premiums for employees. Without a doubt, the impact of premiums is major and beneficiaries remain concerned with their healthcare costs.

Health insurance costs are among the most sizeable financial obligations for older people in the United States. An estimated 28 percent of Americans eligible for Medicare struggle to make monthly premium payments, according to a survey from October 2020.

Cutting the cost burden isn’t cut and dry, but there’s no doubt the effect reducing premiums will have on average Medicare consumers. If that burden can be assuaged with the combined benefit of savings for employers, so much the better.

There is, of course, the possibility of a ripple effect.

If providers raise prices in private insurance plans because more individuals are enrolled in Medicare, the impact could be significant. Research indicates that providers typically do not shift costs to private pays in order to counterbalance costs due to lower payment rates from the public plan, but things can change if a larger group of individuals hits the Medicare pool.

Congress is considering changes to eligibility requirements in the United States, a move that could considerably modify the way Medicare operates. With a wider window to include more enrollees buying in at an earlier age, expanded access and greater affordability would unquestionably be on the table.

And, as research has indicated across the board, access to care is a major issue in the United States.

Still, there are obstacles and reallocating spending to the taxpayer isn’t really ever a popular option – regardless of the potential benefit. The government has options to pony up the green in order to open up Medicare eligibility, so there are strategies to ease the public burden if the ceiling should change.

But it’s clear that substantial savings, particularly for employers spending on health