Protection Implications of Insurance policies to Decrease the Age of Medicare Eligibility

President Biden proposed lowering the Medicare eligibility age to 60 years during the presidential campaign and recently reiterated his support for expanding coverage and making health insurance affordable for older adults. Proposals to lower the Medicare age to 60 years or younger may be considered by Congress. A KFF analysis shows that reducing the Medicare age to 60 could cut employer health plan costs by up to 15 percent if all eligible employees switched from employer plans to Medicare. In addition, another KFF analysis shows that 60-64 year olds who switch to Medicare from employer plans could be covered more cheaply because Medicare payments to hospitals, doctors, and other health care providers are generally lower than private insurers.

This data note examines who might be affected by such policies and what impact this has on health insurance. Most of the people affected by a change in Medicare Age Reduction Policy are already privately insured, so the impact on cost and affordability will be paramount. A relatively small proportion of people in this age group are currently uninsured, so the policy is likely to have only a modest impact on increasing the number of people with health insurance.

Two-thirds of adults aged 60 to 64 are privately insured, either through an employer (56%) or through the non-group market, including those in the Affordable Care Act (ACA) market (11%) (Figure 1) . The policy of lowering the age of Medicare eligibility could potentially relocate 11.7 million people with employer coverage and 2.4 million with non-group insurance to Medicare. It’s not clear how the policy would affect the 14.5% (3 million) who have Medicaid coverage, including the 4% within that group (just under 1 million) who double for Medicare and Eligible Medicaid coverage (those who qualify based on disability for both programs). About 8% of 60 to 64 year olds, or 1.6 million people, are uninsured and could get new Medicare coverage under this policy.

Among uninsured adults aged 60-64, most (66%) are eligible for financial assistance for coverage through the ACA Marketplace or Medicaid (Figure 1). Almost half (48%) are eligible for Market Reward Aid, including those eligible under ARPA Temporary Grants, and 18% are eligible for Medicaid. It is estimated that around 15% have access to private coverage offered by an employer, which they may find unaffordable. The rest are in the coverage gap because they live in a state that has not expanded Medicaid (10%), are unauthorized immigrants (7%), or are otherwise ineligible (2%).

Figure 1: Distribution of health insurance coverage and eligibility among the uninsured among 60 to 64 year olds

A policy to lower the Medicare age may have a marginal impact on the coverage of the nearly 30 million uninsured people in the United States, but it could improve access or affordability for millions. Guidelines to reduce age over 60 – for example, up to 55 or even 50 – could extend coverage to a larger number of uninsured adults (Table 1). As other analysis shows, lowering the age of Medicare eligibility could largely shift coverage costs from employers to the federal government, lowering coverage costs for this population while increasing federal spending. The ultimate impact on coverage, access and affordability will depend on the type of premium and cost-sharing assistance for newly eligible adults, as well as other structural factors.