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A proposal by Democratic presidential candidate Hillary Clinton to lower the Medicare eligibility age could be a mixed bag for employers.
Under the 1965 federal law that created Medicare, the program that covers more than 55 million U.S. residents is limited to retirees who are at least age 65, with narrow exceptions.
Earlier this month during a Virginia campaign stop, Ms. Clinton proposed reducing the Medicare eligibility age to 50 or 55.
While Ms. Clinton suggested that younger retirees would have to “buy in” to the program to some extent, they “would be buying into such a big program that the costs would be more evenly distributed.”
The Clinton campaign has not provided more information about the proposal.
“We may not see a lot of details. Right now, this is campaign rhetoric,” said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.
“Who will be on the hook for the cost? The devil will be in the details,” said James Gelfand, senior vice president of health policy at the ERISA Industry Committee in Washington.
Ms. Clinton is not the first to propose lowering the Medicare eligibility age. Her husband and then-President Bill Clinton did so nearly twenty years ago.
“What about all those people who retire at age 55 and lose their employer-based health insurance and can't draw Medicare until they're 65?” he asked during a speech to the Service Employees International Union in 1997.
A year later, the Clinton administration formalized the proposal that would have allowed employees 55 and older who lost their jobs and exhausted COBRA coverage to purchase Medicare coverage for $400 per month until they turned 65. But Congress never acted on the plan.
Benefit experts see pros and cons from an employer perspective in Ms. Clinton's proposal, which could affect 13 million people, according to an analysis last week by Washington-based consultant Avalere Health L.L.C.
On the negative side, expanding Medicare to younger retirees could lead to more provider cost-shifting to those covered by employer plans.
“Won't they jack up rates even more for those not on Medicare?” Mr. Gelfand asked.
On the positive side, employers could partially offset early retirees' costs by contributing to health reimbursement arrangements to partially offset Medicare premiums.
Indeed, some employers today make HRA contributions that Medicare-eligible retirees can tap to pay premiums for Medicare Part B, which covers physician services and Part D, which provides coverage for prescription drugs, said Sharon Cohen, a principal at Xerox HR Services in Washington.
Others say the proposal's appeal would rest on a key detail Ms. Clinton has yet to provide: how much, if anything, the government would pay.
“We don't know yet what it means to buy in. That has important implications for the government and for individuals,” said Kathryn Wilber, senior counsel of health policy at the American Benefits Council in Washington.
Whether Congress would take up a lower Medicare-eligibility age proposal isn't known. Legislators, though, almost certainly would hold back if the cost weakened Medicare's financial health, Mr. Wojcik said.
“This could accelerate the time table on when Medicare is projected to become insolvent, especially if there is adverse selection,” Mr. Wojick said.
Last year, Medicare trustees projected the program will become insolvent by 2030.