There are two reasons: Traditional health insurance has gaps in coverage that most people fill by purchasing additional plans, which means they pay additional premiums. And the Obama-era Affordable Care Act premiums have recently come down due to Biden’s COVID relief bill. This has made the ACA more attractive to seniors who have not reached the Medicare eligibility age of 65.
“Simply expanding Medicare eligibility does not guarantee affordability of premiums,” the Avalere Health study concluded for the Associated Press.
He found that many low-to-moderate income seniors can already find cheaper premiums in Obamacare markets, while those in the strong middle class would be more likely to benefit if they could enroll in Medicare.
Lowering the age of Medicare eligibility to 60 is politically popular, with nearly 2 in 3 Americans supporting the idea in a Kaiser Family Foundation poll late last year . This included about half of Republicans. But in Congress, the proposal has little support from Republicans, which means it would be up to Democrats to try and push it forward. Liberals are enthusiastic, but moderates fear that tinkering with complicated Medicare funding could have unintended political consequences.
Avalere’s analysis found that traditional health insurance has a significant advantage over Obamacare as hospitals and doctors across the country accept it, while coverage by private insurers typically relies on restrictive networks. Another potential benefit: the combination of traditional health insurance and a supplemental “Medigap” policy provides more generous coverage than ACA’s mid-level plans.
Avalere, a market analysis and consulting company, compared Obamacare premiums to Medicare coverage premiums in Houston, Miami, Los Angeles and Chicago for a hypothetical 60-year-old non-smoker and a 65-year-old enrolled in Medicare. Since ACA financial assistance is tied to income, the study looked at people earning about $ 18,000 per year, those earning about $ 32,000, and those earning about $ 52,000. It also took into account Medicare Advantage, the private insurance option chosen by nearly 4 in 10 Medicare registrants.
Medicare was generally the best deal for those in the strong middle class, those around $ 52,000.
In Houston, a 60-year-old man earning $ 32,000 can get a mid-level “silver” ACA plan for $ 88 per month, compared to $ 284 for traditional Medicare plus a Medigap supplement and a prescription plan, or a Medicare plan. Advantage starting at $ 149. For a resident of the same city earning $ 52,000, the Obamacare plan would cost $ 344, making Medicare the better deal.
A hypothetical 60-year-old person in Los Angeles who earns $ 18,000 can now get a silver plan for a monthly premium of $ 1, compared to $ 277 for traditional health insurance and its supplemental coverage. But for an Angeleno earning $ 52,000, traditional Medicare would cost about $ 70 less per month than the ACA plan.
“Just extending Medicare as it is to younger people doesn’t always mean these patients get a better deal,” said Chris Sloan, industry analyst at Avalere. “The steps taken by the Biden administration to increase Obamacare grants through 2022 have made it really affordable.”
Biden calls on Congress to permanently expand the more generous financial aid that has lowered the cost of Obamacare premiums.
Avalere’s analysis also found that uninsured people only represent 8% of the 24.5 million adults aged 60 to 64 who would be eligible for Medicare by lowering the eligibility age. Of this total, around 6 in 10 are currently covered by employer coverage.
The Biden administration, through the Department of Health and Human Services, made no comment.
Urban Institute think tank economist John Holahan said the new research “illustrates an important point.”
“Medicare as it stands now is kind of a complicated beast with a separate drug plan and no cap,” he said. “The nation has that in the ACA, and at a pretty heavily subsidized amount.”
“It’s hard to see a lot of obvious situations where ‘Wow, that’s a lot’ for someone, or a big improvement over the status quo,” she said.
“The ACA is still basically a subsidy for private insurance,” Khanna said. “What we don’t want to do is entrench the private insurance companies that weigh on US competitiveness and have failed to provide comprehensive coverage to Americans.”
In other results, the study showed that in Miami, the ACA could offer slightly lower premiums than traditional health insurance, even for a strong middle-class individual earning $ 52,000, or a potential savings of around $ 40 per month.
And in Chicago, the traditional Medicare combination would cost a low-income person $ 268 per month. But they could find ACA coverage starting at $ 1.