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Medicare Expansion Raises Hackles Of Doctors, Insurers

Hospitals, doctors and insurers are mounting a full-blown attack on a proposal to allow people under 65 to join Medicare – an idea that's gaining new momentum among Senate Democrats as they scramble to pick up the 60 votes needed to pass the sprawling health care legislation.

The Medicare "buy-in" proposal appears to be part of a tentative package reached late Tuesday between a group of 10 moderate and liberal Democrats who have been working to find consensus on a variety of issues, including whether to include a government-run "public option."

Senate Majority Leader Harry Reid, D-Nev., meeting with reporters Tuesday night, declined to provide details about the package, which he said had been sent to the Congressional Budget Office (CBO) for cost estimates. "It is a consensus that includes a public option and will help ensure the American people win in two ways: one, insurance companies will face more competition, and two, the American people will have more choices," Reid said in a statement.

While details of the package remain fluid, people aged 55 to 64 who were uninsured or could not afford employer-sponsored health insurance would be allowed to enroll in Medicare, the federal program for the elderly and disabled. Currently, there are about four million people in that age group who are uninsured, according to the U.S. Census Bureau. They often have a hard time finding or affording coverage.

Lobbyists for providers and insurers immediately criticized the buy-in proposal, saying that Medicare already doesn't pay enough. Adding more people would only compel hospitals, doctors and others to increase charges to private insurers and employers to make up the difference, they warned.

The Federation of American Hospitals, in an e-mail alert to members, said the industry had already agreed to $155 billion in Medicare and Medicaid payment reductions over a decade and should not be required to make additional financial concessions.

The American Medical Association, whose members face a 21 percent pay cut next year unless Congress moves to reverse it, says doctors will oppose any expansion of Medicare until the program's financial outlook improves.

Insurers are also opposed. "This would add millions of new people to a program everyone agrees is going broke," says Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the industry's lobbying group. He said the legislation already includes help for people over 55, such as rules barring insurers from rejecting applicants with health problems.

The House-passed health care legislation doesn't include a Medicare buy-in provision. In the Senate, meanwhile, major questions emerged about how such a buy-in would work:

- Would subsidies be available to people with low and moderate incomes? Analysts said subsidizing the costs of the premiums would encourage healthier people to join, which could help control premium growth over time.

- How much would people have to pay in premiums? CBO estimated last year that a slightly different proposal — to allow people aged 62 to 64 to buy their way into Medicare – would result in premiums of $7,600 a year. Medicare's expenses would not rise, the CBO said, but the government would see a $1.6 billion increase in Social Security payments between 2010 and 2019 as some people retired early.

- Would the buy-in simply be a temporary measure until exchanges, the insurance marketplaces that would be created under the health legislation, are up and running in 2014? Supporters say this would give immediate relief to those who can't find coverage now. Opponents worry that Congress wouldn't be able to bring itself to end the program, even after the exchanges are operating.

The Medicare buy-in proposal is one element of a multi-pronged strategy a group of 10 moderate and liberal Democrats are developing in a complicated effort to secure the votes needed to pass the health legislation. Among other things, the negotiators are trying to find a middle ground between progressive lawmakers who want the bill to include a public plan run by the government and more conservative members who say they won't vote for a measure if it includes such an option.

In an effort to break the logjam, the lawmakers are discussing allowing private insurers to offer national policies under the supervision of the federal Office of Personnel Management, which currently administers a similar program for federal employees and Congress.

Opening Medicare to those 55 and over has long been pushed by Sen. Jay Rockefeller, D-W.Va., who Tuesday said, "I'm glad to see (this idea) getting serious consideration."

But Sen. Byron Dorgan, D-N.D. said he's not happy with the idea. "We have the lowest Medicare reimbursement rates in the country in North Dakota, we're at the bottom or second to the bottom. We'd have to straighten out the reimbursement rates before I'd want more buy-in to Medicare at current rates."

Leslie Norwalk, former acting administrator of the agency that oversees Medicare, said opponents see the buy-in idea as another step toward increased government control, and eventually a single-payer system.

"Medicare is the most popular health plan out there and the idea that it might be expanded is intriguing," said John Rother, director of legislation and public policy for AARP, the seniors' lobby. "But whether we could support it or not would depend on all these (as yet not spelled out) details that are quite consequential for the future of the program."

Joe Baker, president of the Medicare Rights Center, said he's glad the buy-in idea is being discussed. But, he said, one of the challenges for lawmakers would be to ensure that the buy-in population would get the same benefits as people getting insurance through the new exchanges. If the benefits weren't similar, he said, Medicare might attract only those who couldn't get a better deal elsewhere. That, in turn, could mean it would attract a sicker population, driving up costs.

But under the current versions of the health care legislation, the insurance on the exchanges would be more generous than what Medicare provides. The basic plans offered under the House-passed legislation would limit annual out-of pocket costs to $5,000 for individuals and $10,000 for families. The Senate limits are a bit higher. But traditional Medicare doesn't have limits on out-of-pocket costs.

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health-care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente.

Copyright 2023 Kaiser Health News. To see more, visit Kaiser Health News.

Julie Appleby
Mary Agnes Carey