Medicare Buy In Option A Good Idea
The verdict from the Congressional Budget Office regarding a Medicare buy-in option for Americans younger than 65 is clear: such a measure would mean fewer uninsureds and lower health insurance premiums. The reason is pretty simple: Medicare doesn’t have a profit motive. It also covers pre-existing conditions, so opening up Medicare to younger Americans would allow people who are currently uninsurable in the individual health insurance market to purchase quality coverage from the government.
The CBO study only considered the possibility of allowing people age 62 – 64 to buy into Medicare. The assumption is that if Medicare were opened up as an option for people of all ages, the cost savings would be even greater.
We often hear people talk about “government-run health care” as if they were describing flaming bamboo shoots being stuck under their toenails. But I wonder what would happen if the government did decide to open Medicare up to anyone who wanted it and was able to pay for it? If the premiums were lower than what you pay right now, would you switch? I’m guessing that a good number of the 744,000 uninsured people here in Colorado would probably be willing to take a chance on government-run health care if they could afford the premiums. People who love their current health insurance coverage and are able to afford it would likely keep what they have. So would people who get great health insurance benefits from an employer who picks up most of the cost. But I would guess that for people who buy their own health insurance, or for people who are unable to qualify for health insurance because of pre-existing conditions, government-run health care doesn’t sound too bad at all.
It makes sense that if Medicare were to be expanded to allow younger Americans to buy into the system, costs would go down across the board. Private health insurance companies would have to compete against lower Medicare premiums. Providers would see more reimbursement at a Medicare level, which is lower than the reimbursements they get from private health insurers, so their overall income would drop. Profits in the for-profit health care industry would decline. Jay and I are in the health insurance industry, and we realize that the expansion of Medicare would mean that our income would drop too. But we still think it’s a good idea, since more people would have health insurance and access to health care. And that seems like a good trade.
Louise:
Public and private insurers use different accounting sytems.
Public insurers, such as Medicare, operate on a cash basis, while private insurers operate on an accrual basis.
Liabilities for Medicare do not extend beyond the current year, while private insurers account for liabilites that are expected to occur beyond the current year.
In addition, reserves in Medicare cannot be converted into cash, while reserves in a private insurer can be converted into cash.
At least from an accounting perspective, Medicare has a huge advantage over private insurers.
Don Levit
Louise, 60% of the private sector health plans already are nonprofit (www.nonprofithealthcare.org)…so some of that logic is undercut. You’re right, providers would make less on these patients, and who do they make it up on? Private sector – the rest of us foot the bill, that’s just adding to the problem we already have.
Plus, the private sector industry groups (AHIP, Blues – full disclosure, I work for one) have already agreed to the concept of eliminating medical underwriting, just so it’s done across the board so all play by the same rules.
Who pays the tab doesn’t change the underlying problem that we have runaway demand for very expensive care supplied by an inefficient system. Not saying this is a bad idea, just saying it’s a patch job for the uninsured, interim humanitarian step, not the scope of reform needed.