Lowering the age for Medicare

Another Reader said:
It's always seemed odd to me that you can get Social Security at 62 but have to wait until 65 for Medicare. If most people that take Social Security early do so because they need the money, perhaps they can be covered under a low cost ACA plan or Medicaid. However, people that need to take Social Security early may not be able to qualify for or afford the low cost subsidized premium ACA plan or they may live in a state that did not expand Medicaid.
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I'm not sure exactly how that would work. In the case of SS, one choses for a lifetime of lower monthly benefits. Would you suggest that Medicare at 62 have a higher monthly premium for life or perhaps an x% copay for life just to make early Medicare similar to early SS?

I not sure that I buy into the theory that most early SS recipients do so because they need the money. Some, yes. But as a rule? I don't think so. I know many who take early benefits for other reasons. I may be wrong.

It is not surprising to me to see discussion of lowering the Medicare age on an early retirement board. Medical insurance has always been the major unknown for bridging the gap between work life and Medicare age. It would seem to me that the ACA, with all of its issues, has served as that bridge for early retirees much better than pre-ACA times. I know that the ACA premiums and deductibles can be high. These premiums and deductibles are not that much higher than when I was buying a private policy before the ACA. At least with the ACA, they can be covered with preexisting conditions. Premiums for those "of need" are reduced via the subsidy. Those of significant "need" are covered by Medicaid.

I'm all for expanding Medicare in principle. The devil is in the details.
 
The cost of medical care gets paid, one way or another...

Seems to me that the larger the pool, the better to spread the risk. Yes, some “healthy” folks would pay “too much”. Not the worst problem to have.

As for lowering the cost of medical care, well, that’s a whole nuther kettle of fish...
 
CRLLS said:
...

I not sure that I buy into the theory that most early SS recipients do so because they need the money. Some, yes. But as a rule? I don't think so. I know many who take early benefits for other reasons. I may be wrong.

...
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You are NOT wrong, people take SS early for many reasons, only 1 of which is they absolutely need the money.

Some other reasons are:

  • Believe the system will stop, so grab the cash while you can.
  • Lack of ability to resist the lure of free money.
  • Can't do math so don't understand will get more if delay.
  • Believe they can get the cash, invest it better, and end up with more than if waited.
  • Have serious life threatening/shortening health reasons, so believe/know will die prior to Full Retirement Age.
 
harllee said:
The big issue would be financing it --the sliding scale idea for premiums is a good one. I wonder if anyone has ever done a cost analysis on this.
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Didn't "they" determine that a modest wealth tax on the top 0.1% would cover the cost? 99.9% of us would be unaffected.
 
MichaelB said:
Medicare, OTOH, has the entire population enrolled.
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Hmmmmm....... I thought you had to be a 65 or over geezer or a person with a qualifying disability. That's not really representative of the "entire population."
 
Sunset said:
[*]Believe they can get the cash, invest it better, and end up with more than if waited.
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And with the market returns of the past decade, that's actually worked! :)
 
USGrant1962 said:
Medicare spends $11,000 per person per year, so you could assume that is what a "buy in" would cost. Maybe a little less for 55-64, but still makes ACA look good.
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Is part of the difference explained by the fact that ACA is pay as you go while Medicare runs giant deficits and is horribly in the red?
 
Sunset said:
You are NOT wrong, people take SS early for many reasons, only 1 of which is they absolutely need the money.

Some other reasons are:

  • Believe the system will stop, so grab the cash while you can.
  • Lack of ability to resist the lure of free money.
  • Can't do math so don't understand will get more if delay.
  • Believe they can get the cash, invest it better, and end up with more than if waited.
  • Have serious life threatening/shortening health reasons, so believe/know will die prior to Full Retirement Age.
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I think 1 and 2 are just part of 3.

youbet said:
And with the market returns of the past decade, that's actually worked! :)
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Depends on what they invested in. CDs were a loser, S&P 500 a winner, but with no guarantee. Most people would be hard pressed to consistently beat the 8% return on waiting. And we're back to 3.
 
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youbet said:
Didn't "they" determine that a modest wealth tax on the top 0.1% would cover the cost? 99.9% of us would be unaffected.
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At least one person has made that claim. At least one other person doubts that person's claim.
 
It’s interesting to see some people casually advocate for more bennies for one group of people without any substantial thought on exactly who would pay for it. From a system that’s already seriously underfunded. I’d hope everyone here is smarter than the deliberately vague catch all “corporations and the rich.”

Do the same people retire without working out how to fund retirement, because it sounds good?
 
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Isn't the age of 65 not some arbitrary number but at the time Medicare was created, the actuaries figured out that was about the average person's lifespan?

So, to make a change of lowering the qualification age I'd think actuaries would have to factor in the math to make Medicare still survive.
 
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easysurfer said:
Isn't the age of 65 not some arbitrary number but at the time Medicare was created, the actuaries figured out that was about the average person's lifespan?
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Medicare had nothing to do with it. As this article makes clear (as is possible anyway) the origin of the "age 65 retirement" is a bit fuzzy.

https://www.journalofaccountancy.com/issues/2018/mar/how-65-became-default-retirement-age.html

Most accounts credit German Chancellor Otto von Bismarck with setting the age at 65 in 1889. Bear in mind that at the time not very many folks made it
 
The money secretly funnels into Scrooge McDuck's money bin

Aerides said:
The problem currently being talked about most is cost
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No it isn't. No one talks about cost. What they talk about is price.

There's plenty of controversy over who to stick it to, but until there's movement on ferreting out actual costs, it's all posturing. I doubt there's anybody who can say what the real cost of medical care is. Nobody knows where the money goes because the whole system is opaque.

Consider a knee replacement. An invoice from the hospital appears that says $150,000. Later on, a statement from the insurer says "negotiated rate" $12,000. Finally, the patient gets a bill saying "your 20% co-pay is $2400".

Did the hospital recklessly take a $138,000 bath on that operation? Is that insurance company filing Chapter 11 because they gleefully hand out $9600 checks?

When the ultimate consumer gets out paying 1.6% of the sticker, I don't believe you can draw any precise conclusions about what it really costs.

It is, of course, sickening that some unfortunate individuals will be presented with a demand for that original 150k, and it will ruin them. It's obscene since the identical procedure could be executed almost anywhere else on the planet for orders of magnitude less. But changing Medicare doesn't address that at all.
 
Retiree_Having_Fun said:
When states pass laws that eventually might be good for the entire nation but not everybody is sure, state laws allows small amounts of experimentation with throwing out the status quo.
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This is true, but sometimes it's hard for a state to "go it alone". I think about Vermont's now-abandoned plan for universal health care. If no other states do this, it would make Vermont a magnet for those who are in poor health and are of modest means -- that is, it would kick in a massive adverse selection as people who pay little in taxes but "consume" a lot of health care move to the state, helping to bankrupt the system. At a national level it's more doable because it's a lot harder to move out of a country than to move from one state to another.
 
The SSA actually has a write up about how the retirement age of 65 came about:

This decision was not based on any philosophical principle or European precedent. It was, in fact, primarily pragmatic, and stemmed from two sources. One was a general observation about prevailing retirement ages in the few private pension systems in existence at the time and, more importantly, the 30 state old-age pension systems then in operation. Roughly half of the state pension systems used age 65 as the retirement age and half used age 70. The new federal Railroad Retirement System passed by Congress earlier in 1934, also used age 65 as its retirement age. Taking all this into account, the CES planners made a rough judgment that age 65 was probably more reasonable than age 70. This judgment was then confirmed by the actuarial studies. The studies showed that using age 65 produced a manageable system that could easily be made self-sustaining with only modest levels of payroll taxation. So these two factors, a kind of pragmatic judgment about prevailing retirement standards and the favorable actuarial outcome of using age 65, combined to be the real basis on which age 65 was chosen as the age for retirement under Social Security. With all due respect to Chancellor Bismarck, he had nothing to do with it.
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https://www.ssa.gov/history/age65.html
 
My view is that it is the front end of the system that is the most broken... and by the front end I mean numerous insurers each having different contacts with medical providers and with each insurer having different procedures for getting procedures authorized, filing a claim, etc. I could envision having all of that front end stuff centralized in a manner similar to Medicare/Medicaid.... medical service providers would only deal with Medicare and Medicare would process claims and pay the medical providers based on a separate schedule of prices for private pay patients (and not the lower reimburement rates for Medicare or Medicaid patients)... Medicare would then bill each health insurer for claims paid relating to the insurer's customers and the biling would reduce the insurer's deposit with Medicare and the insurer would pay medicaid to replenish that deposit.

While insurer's wouldn't be able to negotiate special rates with health care providers in the areas that they operate, they would also not have to negotiate rates with all those health care providers or authorize procedures or process claims... though they would need to pay Medicare for claims processing... what Medicare would do for the health insurers would be similar to administrative service only services that insurer's currently offer to group health insurance plans.

Insurer's could still assess what their claim costs would be under this new regime, and price premiums based on expected claims cost along with provisions for expenses, taxes, overhead and cost of capital like they do today and those premiums would be subject to the same regulatory approval process as today and the same competition as individual health insurance policies are subject to today. The insurers could also still offer group health insurance to employers similar to the way that they do today.

However, this approach would likely end up making it easier for patients to make informed decisions on the cost of treatment alternatives since there would be less variability in the prices of services and it would make medical billing and reimbursement much easier for medical service providers.
 
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youbet said:
Hmmmmm....... I thought you had to be a 65 or over geezer or a person with a qualifying disability. That's not really representative of the "entire population."
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A bit sloppy on my part, the intent was to say 100% of the eligible population. My post has been corrected.
 
USGrant1962 said:
Medicare spends $11,000 per person per year, so you could assume that is what a "buy in" would cost. Maybe a little less for 55-64, but still makes ACA look good.
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Part of the reason that cost is so low is because Medicare dictates reimbursement rates to medical providers and those rates are not that great... the medical provider effectively overcharges private insurance patients to recover the difference.... that would increase the amount but it would be partly offset by a lower number of claims since the patients covered would be younger and in aggregate use less in medical services. I have no idea how it would net out.
 
ziggy29 said:
This is true, but sometimes it's hard for a state to "go it alone". I think about Vermont's now-abandoned plan for universal health care. If no other states do this, it would make Vermont a magnet for those who are in poor health and are of modest means -- that is, it would kick in a massive adverse selection as people who pay little in taxes but "consume" a lot of health care move to the state, helping to bankrupt the system. At a national level it's more doable because it's a lot harder to move out of a country than to move from one state to another.
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pb4uski said:
My view is that it is the front end of the system that is the most broken... and by the front end I mean numerous insurers each having different contacts with medical providers and with each insurer having different procedures for getting procedures authorized, filing a claim, etc. I could envision having all of that front end stuff centralized in a manner similar to Medicare/Medicaid.... medical service providers would only deal with Medicare and Medicare would process claims and pay the medical providers based on a separate schedule of prices for private pay patients (and not the lower reimburement rates for Medicare or Medicaid patients)... Medicare would then bill each health insurer for claims paid relating to the insurer's customers and the biling would reduce the insurer's deposit with Medicare and the insurer would pay medicaid to replenish that deposit.

While insurer's wouldn't be able to negotiate special rates with health care providers in the areas that they operate, they would also not have to negotiate rates with all those health care providers or authorize procedures or process claims... though they would need to pay Medicare for claims processing... what Medicare would do for the health insurers would be similar to administrative service only services that insurer's currently offer to group health insurance plans.

Insurer's could still assess what their claim costs would be under this new regime, and price premiums based on expected claims cost along with provisions for expenses, taxes, overhead and cost of capital like they do today and those premiums would be subject to the same regulatory approval process as today and the same competition as individual health insurance policies are subject to today. The insurers could also still offer group health insurance to employers similar to the way that they do today.

However, this approach would likely end up making it easier for patients to make informed decisions on the cost of treatment alternatives since there would be less variability in the prices of services and it would make medical billing and reimbursement much easier for medical service providers.
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Two insightful posts!
 
harley said:
...Most people would be hard pressed to consistently beat the 8% return on waiting. And we're back to 3.
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There is no 8% return for waiting... from FRA to age 70 benefits go up 8% a year... from 62 to FRA it varies but figure a little over 6% a year. We're back to 3. :D

You only know the increased return if you know when you will die... but if your FRA is 66 and the returns are shown in the table below if you live to various ages... the return is negative before the breakeven because you gave up more than what you got in return but it goes up quite a bit after the breakeven point.

According to the SOA Longevity Illustrator, a 66 yo non-smoker male and female of average health are expected to live to be ~86 and ~89, respectively... so the financial return on delaying from 66 to 70 would be 3.07% for men and 4.23% for women... since the cash flows do not include COLA, the 3.07% and 4.23% are real rates of return... if inflation averaged 2.5% that would be a nominal return of 5.57% for men and 6.73% for women.... pretty good IMO.

If you do the same analysis for 62 vs 70 then the nominal returns are ~6.53% for men and 7.43% for women.

SS at 66SS at 70DifferenceReturn
62
63
64
65
6612,000-12,000
6712,000-12,000
6812,000-12,000
6912,000-12,000
7012,00015,8403,840
7112,00015,8403,840
7212,00015,8403,840
7312,00015,8403,840
7412,00015,8403,840
7512,00015,8403,840
7612,00015,8403,840-9.77%
7712,00015,8403,840-7.01%
7812,00015,8403,840-4.83%
7912,00015,8403,840-3.09%
8012,00015,8403,840-1.67%
8112,00015,8403,840-0.51%
8212,00015,8403,8400.46%
8312,00015,8403,8401.28%
8412,00015,8403,8401.97%
8512,00015,8403,8402.56%
8612,00015,8403,8403.07%
8712,00015,8403,8403.51%
8812,00015,8403,8403.90%
8912,00015,8403,8404.23%
9012,00015,8403,8404.53%
9112,00015,8403,8404.78%
9212,00015,8403,8405.01%
9312,00015,8403,8405.22%
9412,00015,8403,8405.40%
9512,00015,8403,8405.56%
9612,00015,8403,8405.70%
9712,00015,8403,8405.83%
9812,00015,8403,8405.95%
9912,00015,8403,8406.06%
10012,00015,8403,8406.15%
 
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Midpack said:
It’s interesting to see some people casually advocate for more bennies for one group of people without any substantial thought on exactly who would pay for it. From a system that’s already seriously underfunded. I’d hope everyone here is smarter than the deliberately vague catch all “corporations and the rich.”

Do the same people retire without working out how to fund retirement, because it sounds good?
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Oh my gosh. Thank you soooo much. A voice of reason.

Folks, do any of you look at new patient requirements at many of the large clinics and hospitals? They say "we are not accepting new Medicare patients". Luckily I've been with the same group and will be ok. Why do they do this? Duh. Because Medicare reimburses at such a low rate that it's not sustainable. This program will NEVER be changed. The medical lobby group will not allow it. You want new equipment and state of the art medicine? Not going to happen with the level of reimbursement from Medicare.

Secondly, those who are not part of the 1% of any group want to tax the crap out of it. I'm not one of them but these are shared responsibilities. Just like those of you on ACA with subsidies and large net worths. Someone else is paying the tab.
 
ziggy29 said:
This is true, but sometimes it's hard for a state to "go it alone". I think about Vermont's now-abandoned plan for universal health care. ...
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Yes, universal health care was going to be biting off more than Vermont could chew.... however, the state adopted prohibiting medical underwriting long before ACA and adopted community-rating (prohibiting age-rating) long ago as well... essentially, individual health insurance is for one large group of 18-64 year olds for the whole state.

Vermont is also trying to migrate from a fee for services model to a accountable care organization model... participating health care providers will get paid based on the number of patients that they serve rather than for each service that they provide.

This might be intereting reading to those who are into it. Time will tell whether it will be successful or not.

Vermont’s Bold Experiment in Community-Driven Health Care Reform

In 2014, on the heels of a failed attempt to create a single-payer health care system in Vermont, policymakers turned their attention to how they might achieve their goal — lower health care spending and improved health outcomes — without disrupting the existing payment system. Their idea was to encourage the state’s largest payers — Medicare, Medicaid, and Blue Cross and Blue Shield of Vermont — to move more quickly from fee-for-service to risk-based contracting. In so doing, they would also encourage providers to pursue the state’s goals for improving residents’ health.

The concept appealed to OneCare Vermont, a large accountable care organization (ACO) that had engaged more than half the state’s physicians and nearly all its hospitals in its network but had struggled to earn savings in its previous contracts with insurers.

Under the “all-payer” ACO model, the three payers would steadily increase the number of patients cared for under risk-based contracts and provide additional financial support to OneCare to coordinate care for individuals considered to be high medical risks. In return, OneCare would take on downside financial risk for itself and participating hospitals, a move it hoped would spur the latter to collaborate with community partners in helping patients beyond their institutions’ walls.
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Rather than a flat age, what if you could claim Medicare after paying into the system for 30 years? I've paid into the system for 40 years but an over two years from Medicare. I would love to retire, but can't because of the great employer-provided healthcare. I would be happy to apply for Medicare right now!
 
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