Sep 15, 2020
A study by the Employee Benefits Research Institute (EBRI) looks at how expanding Medicare could affect employer-sponsored plan costs. The plan by presidential nominee, Joe Biden would allow people to enroll in government-run Medicare coverage at 60. Also, people age 50 to 64 would be able to buy coverage through a public option.
EBRI finds that, depending on plan design, those who switch to Medicare tend to be healthier and lower-spending workers. Thus, the impact on spending would likely not be extreme.
The EBRI model suggests that employers’ expenditures may decrease. Workers are sensitive to the generosity of their employer-sponsored plan relative to Medicare and are particularly sensitive to monthly premiums and out-of-pocket maximums. However, providers might raise their commercial prices to offset the loss of revenue as more people are covered by Medicare.
Further, workers switching to Medicare are likely to be lower spenders who do not reach the annual out-of-pocket maximums of their employer-sponsored plans. As such, the premiums for workers who stay with their employer-sponsored plan frequently rise.
Providers might raise their commercial prices to offset the loss of revenue as more people are covered by Medicare.
