Biden's Proposal to Lower Medicare Eligibility to 60: Winners and Losers

November 16, 2020
Peter Wehrwein
Peter Wehrwein

Some employers would benefit if their older employees go on Medicare, and people in their 60s would have some safety net if they can't find a job with benefits. Provider revenues might take a hit because of lower Medicare reimbursement.

One of President-elect Joe Biden’s most straightforward— and popular — healthcare proposals is to lower age at which Americans become eligible for Medicare from 65 to 60.

Surveys don’t show a large red-versus-blue divide on the issue; a large majority of Republicans and Democrats support the notion. Some employers stand to benefit because their healthcare insurance costs would go down if employees in their 60s were covered by Medicare instead of private insurance paid for, in part, by the employer.

In April, Avalere Health, the consulting business, issued an analysis that showed that lowering the Medicare age to 60 could mean as many adding 23 million Medicare beneficiaries to the current number of about 60 million.

Avalere’s experts estimate that more than half (59%), or 13.4 million, of the new beneficiaries would shift into the program after being previously cover by an employer-sponsored pan. Another 17%, or 3.8 million people, would swap Medicaid coverage for Medicare coverage, and 14% would swap coverage purchases in the individual market for Medicare, according to Avalere's figures.

As popular as lowering Medicare eligibility might be, there’s likely to be some opposition — or, at the very least, misgivings. As Kaiser Health News reported last week, Medicare pays providers at lower rates than private insurers. Some hospitals might see a major hit to their revenues if the 60-64 age group is covered by Medicare instead of private insurers — if Medicare reimburses at its usual rates for this age group.

The Kaiser Family Foundation published a report in April comparing private insurance reimbursement with Medicare. The foundation found that private insurers pay, on average, nearly double (199%) of Medicare’s rates for hospital services. The difference is less for physician services but still substantial: The foundation’s researchers found that private insurers’ pay 143%, on average, of what Medicare does for physician services.

On other hand, lower the Medicare eligibility would also expect the number of insured Americans and, for the most part, expansion of coverage tends to benefit providers.

Still, a report by Mercer, the human resources consulting firm, last month pointed out that expanding Medicare to people in their 60s could result in even more cost shifting to private insurers as providers look for ways to make up for their lost revenues. Mercer also cautioned that a shift away from employer-sponsored insurance to Medicare could “erode the value proposition” of employment and “make it more difficult for employers to differentiate their benefits.”