Expanding the program to Americans over 60 would help the affluent.
Joe Biden has inched closer to Medicare for All, promising last week to expand the health program to all Americans over 60. But Mr. Biden’s plan relies on large cuts to hospital revenues that won’t fly in Congress, especially among Democrats. More to the point, his expansion is poorly designed if the goal is to help the uninsured.
Mr. Biden proposes reducing the age of Medicare eligibility from 65, thus establishing an option for older workers that would be heavily subsidized by taxpayers. Employers would be prohibited from dropping the newly eligible from their plans.
Hospitals now are effectively required to treat Medicare enrollees at rates averaging 59% less than what hospitals receive from employer-sponsored insurance plans. In 2015, adults 60 to 65 accounted for 6% of the U.S. population but 17% of costs paid by private insurers, according to data collected by the Department of Health and Human Services. Hospitals will surely balk at the prospect of politicians decimating such a significant revenue stream.
Left-leaning presidential campaign teams often argue that expanding Medicare’s regulated prices would reduce hospital costs, but Democratic lawmakers seem preoccupied with the opposite concern, that hospitals don’t get enough money. The party’s leadership is spearheading efforts to increase hospital funding substantially after Covid-19. Recent efforts in Congress to end “surprise medical billing” were derailed by the prospect of payment reductions.
Perhaps more important: Only 8% of the 60-to-64 age cohort is currently uninsured. Instead of simply extending coverage only to these Americans, Mr. Biden would ask taxpayers to pick up the tab for those in this age group who are already covered—roughly $250 billion a year paid out from private insurance. Medicare outlays are already expected to double in the next decade and the program’s trust fund is projected to be insolvent in 2026.
Premiums cover only 15% of the cost of Medicare, which is designed to subsidize generously the coverage of Americans no longer able to work. This may be appropriate as special assistance for retirees and the disabled, but it makes little sense for 60- to 64-year-old workers, whose median household income was more than $92,000 in 2017. Mr. Biden’s proposal would help the relatively affluent instead of devoting resources to the most needy. Only 1.6 million of the 28.5 million Americans uninsured in 2017 were in the 60-to-64 age group, according to Census Bureau data.
Mr. Biden’s proposal is all the more disappointing given the many problems that need solving in health-care markets: premiums on the Affordable Care Act exchanges that doubled in three years, for instance. The promise of a major handout for baby boomers might help Mr. Biden win votes in November, but it won’t fix Medicare’s flaws or assist the families that need help the most.
Chris Pope is a senior fellow at the Manhattan Institute and author of a recent report, “Medicare For All? Lessons from Abroad for Comprehensive Health-Care Reform.” Follow him on Twitter here.
Benedic Ippolito is a resident scholar at the American Enterprise Institute.
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