How A Lower Medicare Age May Affect Health Plan Costs

Employer health plan costs could drop significantly if the Medicare age were lowered, according to an analysis by the Peterson Center on Healthcare and the Kaiser Family Foundation.

One of President Biden’s campaign proposals was to lower the Medicare eligibility age to 60. More recently, Congressional Democrats reintroduced a bill that would allow people 50 to 64 to buy into Medicare. Researchers project cost savings as follows:
 

However, the researchers say that savings on employer-sponsored costs and premiums could be much smaller. It depends on how many people choose Medicare instead of the employer plan, how many uninsured adults gain coverage, and other factors. Also, the cost savings to employers would be smaller if sicker enrollees stayed on the employer coverage. 

People with access to employer-sponsored health coverage are more likely to switch to Medicare if it lowers their premiums and out-of-pocket costs. This would be true for many people, especially with the lower premiums and additional coverage that come with private Medicare Advantage Plans. However, the lower the Medicare age is reduced, the more likely it is that people will need to consider health plan options for their spouse or child dependents.
 
The shift from employer coverage to Medicare could exacerbate the financial challenges facing Medicare’s Hospital Insurance Trust Fund. In his campaign, President Biden proposed to finance the expansion through general revenues, rather than the Trust Fund. 
 
While people age 60-64 represent only 7% of enrollees in large employer plans, they account for 15% of health plan spending (not including out-of-pocket costs). Similarly, people 55-64 represent 15% of enrollees in large employer plans but account for 30% of health plan spending. People 50 to 64 represent 24% of enrollees in large employer plans but account for 43% of health plan spending.