By Jack Pladziewicz
For the Chippewa Valley Post
The ongoing national debate on repealing the Affordable Care Act (the ACA, or “Obama Care”) and replacing it with a GOP-designed American Health Care Act (“Trump Care”) has engaged both houses of Congress, the White House, hospital and doctors associations, the AARP and other advocacy groups on all sides of the political spectrum.
The most important group – the American public – is rarely asked to speak directly except through their elected representatives, most of whom are driven by the political agenda of their party, swayed by lobbyists or some combination of both. Why not simply give all Americans a choice in purchasing healthcare insurance that includes the option of buying into the Medicare system while paying the full premium cost for their particular demographic group?
Is this approach practical? How would it be funded? Let’s explore those concerns.
Buy-in Premiums Must Cover Full Costs
The key to a successful Medicare option for those younger than 65 is to make their buy-in premiums reflect the full cost of covering them. The demographic and health utilization data needed to price such premiums properly are already available.
Given that availability, it would be relatively straightforward to determine the full-cost premiums for various groups – age grouped single women, single men, couples, families, etc. This is exactly what insurance companies already do annually in determining premium costs for an array of policies.
The Medicare buy-in calculation would in fact be simpler since a standard level of coverage applies to all participants, i.e., there is only one plan.
Will it cost less than insurance currently available from private companies? That answer is unknown until the calculations are done and the Medicare buy-in is offered, at least on a trial basis.
If it costs more (highly unlikely), private insurance will win out and the pre-65 Medicare buy-in option will have little impact. An exception might possibly occur in some regions where there is no competition and private rates are therefore artificially high.
Successful Medicare Option Could Greatly Lower Healthcare Costs
However, if a Medicare buy-in option provides cost-effective insurance that competes successfully and broadly with private insurers, it will disrupt the U.S. health insurance market with the potential to reduce healthcare insurance costs immensely.
One criticism might be that a one-tier Medicare plan will not meet everyone’s needs. The option to buy supplemental insurance on the open market, as is currently available via Medicare Advantage for those over 65, would answer that concern. It would allow anyone under 65 buying into Medicare the opportunity to tailor their coverage beyond basic Medicare, to meet their needs and income.
A major criticism of the ACA is that private insurers are abandoning some regional markets, leaving those parts of the country with only a single provider. Recent data indicate that one-third of U. S. counties have a single insurer in the ACA market.
Providing those under 65 with the Medicare buy-in option would alleviate this problem. To smooth the transition to such a system, the option could be offered first in any region where only one private insurance company is offering coverage. This could serve as a limited test of feasibility.
Government Healthcare Insurance ‘Takeover’?
One (politically-based) criticism of allowing Americans younger than 65 to buy into Medicare will be that it amounts to “a government takeover of healthcare insurance.”
However, that would only be true, and only in a limited way, if Americans in large numbers chose the Medicare buy-in option for their healthcare – presumably because it offered better coverage at a competitive cost compared to private insurance. What’s wrong with that?
The issue should not be who provides healthcare insurance. Rather, it should be how best to allow Americans to choose for themselves the insurance provider offering the best care at the most affordable cost.
Through Medicare and Medicaid the U. S. government is already involved in providing healthcare coverage to more than 55 million Americans. Providing a buy-in option for other Americans simply allows them another choice for their insurance – especially important in regions where private insurers are not competing.
Who Would Pay What?
Currently Medicare recipients pay payroll taxes while employed, with the guarantee of medical insurance for life after age 65. Typical recipients receive much more in medical benefits after 65 than they paid through payroll taxes while working.
U.S. taxpayers would not be asked to pay anything to make this option available. In fact, increasing the total enrollment by allowing the inclusion of additional members who pay the full annual cost should provide a measure of economic stability to the Medicare system by reducing the overall imbalance between payments and benefits.
Many will argue that this will lead to a “single payer” system where the government is the payer. This is only partly true. It is correct that if many Americans chose this option, Medicare would become a much larger payer of doctors and hospitals than is currently the case.
However, private insurers would still provide insurance and make payments where they compete and be the payer for services covered under Medicare Advantage or other supplemental insurance. If the government became a larger payer than it is today, it would happen because Medicare offered a more effective and affordable option than do private insurance companies.
A Medicare buy-in option as described would be cost neutral, unless Congress decided to provide vouchers, tax credits or other assistance to purchase insurance. Some of these approaches are being discussed in Congress as it tries to define a replacement for the ACA. Anything Congress chooses to include in an ACA replacement could as easily be applied to a fully self-funded Medicare buy-in option for those under 65.
ACA Replacement Should Include Self-Paid Medicare Buy-in
Let the Congress define the new healthcare law. But whatever our legislators do, they should provide Americans with an optional Medicare buy-in, on a fully self-paid basis.
If employers chose to pay the Medicare premiums rather than purchase private insurance for their employees, they should be allowed to do so. Whether employers currently pay the full cost of health insurance or share costs with employees, the same options should be available for a Medicare buy-in.
Medicare certainly is not perfect and every effort should be made to make it more efficient and to reduce fraud and other abuse. Nonetheless, it effectively and efficiently delivers healthcare to 55 million of the most expensive to insure Americans – those over 65 or with disabilities.
Moreover, Medicare is already present in every region of the country and has established methods of determining costs, receiving claims and issuing reimbursement. There is every reason to believe that it could accommodate additional Americans if the costs of covering them were fully funded through premiums.
Why not let Americans decide for themselves whether or not government managed health insurance – i.e., Medicare – is best for them?
About the Author: Jack Pladziewicz, a member of the chemistry faculty of UW-Eau Claire from 1973-2002 and now Professor Emeritus, has written previously for the Chippewa Valley Post on the fiscal and policy ramifications of allowing private sector employees to buy into state pension and/or healthcare plans. Between 2003-2014 he worked in various capacities for Research Corporation for Science Advancement (rescorp.org), a private foundation dedicated to funding basic scientific research in the United States since 1912. He retired as president of the foundation in 2014.