RAND study: Medicare buy-in could jack up premiums for younger people in ACA plans

Medicare enrollment form and pen
A new RAND study examines the impacts of a Medicare buy-in plan. (Getty/zimmytws)

Though a Medicare buy-in plan would likely lower costs for older adults, it could lead to higher premiums for younger people in the exchanges, according to a new report. 

Researchers at RAND Corporation modeled eight different approaches to building a Medicare buy-in plan for people between the ages of 50 and 64 and found premiums for those remaining in the Affordable Care Act (ACA) markets would likely increase by between 3% and 9%. 

A Medicare buy-in plan would represent significant savings for those who jump to it, meaning it would attract plenty of interest from older people currently in exchange plans, according to the study. An average annual premium of $10,000 would be attractive, as older ACA plan enrollees may pay as much as triple what younger people pay. 

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However, older people in ACA plans are often healthier than younger people, according to the study, as young, healthy people looking to cut healthcare costs typically skip coverage altogether.  

So, a mass exodus would lead to a higher imbalance in the risk pool, Christine Eibner, lead study author and the Paul O’Neill Alcoa Chair in policy analysis at RAND, told FierceHealthcare. 

“Counter to some of the conventional wisdom, these older folks are acting as a stabilizing force on the marketplaces,” Eibner said. 

For a typical 50-year-old, a Medicare buy-in plan could save them $2,500 per year compared to a gold-level plan, while it would be about $500 more than a bronze-level plan. However, a bronze plan would offer skimpier coverage. 

For someone aged 60, buying into Medicare would represent $8,000 per year in savings over a gold plan on the exchanges and $3,700 in savings over a bronze plan. 

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With savings of that level, it would be a major challenge to entice those members to stay in the ACA markets, Eibner said. 

The study also did not find significant evidence that a Medicare buy-in would reduce the uninsured population. Though it could boost coverage for people over age 50, those gains would likely be offset by younger people dropping out of ACA coverage, Eibner said. 

Rolling out a buy-in would also not impact the Medicare Trust Fund or outcomes for existing Medicare beneficiaries, according to the study.