Medicare Buy-in for Older Americans Could Raise Premiums for Younger Consumers

The study projected that 6 million people would move from the individual markets to a Medicare buy-in program.

Creating a Medicare buy-in program for individuals between the ages of 50 and 64 would lower premiums for that age group but also increase premiums for younger consumers on the individual market, according to a RAND Corp. study released Monday.

Savings for an average 50-year-old buying into Medicare would be $2,500 less than buying a gold-level plan on the insurance exchanges established by the Affordable Care Act (ACA). Meanwhile, an average 60-year-old would save $8,000 per year for the same plan.

In the base scenario, around 6 million people between the ages of 50 to 64 would move to Medicare from the individual markets, according to RAND.

However, while most Medicare premium costs for older Americans would be $10,000 per year in 2022 under a buy-in program, premiums would increase between 3% to 9% for younger consumers.

Christine Eibner, Paul O'Neill Alcoa Chair in Policy Analysis at RAND, told HealthLeaders that older individuals constitute a sizable portion of the insurance exchanges, which would suffer if a Medicare buy-in was available.

"What we're finding is that older people tend to pay three times more than younger people on average than they actually consume," Eibner said. "So when those older people move into the buy-in market, the exchange market is not doing quite as well. [The exchange market] is losing some of that good selection."

Eibner said this particular Medicare buy-in model would serve as a continuation of the existing ACA structure and cater to a select group of consumers without access to employer-based coverage that could buy into the program.

She said these individuals would have otherwise been enrolled through the insurance exchanges or uninsured.

Eibner added that under this scenario, hospital executives would have to contend with an extension of Medicare reimbursement rates for a portion of their patient populations.

The study's findings did not have a significant impact on the total number of people with insurance, Eibner said, as approximately 246 million people under the age of 65 would be insured in a Medicare buy-in scenario.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.