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Fact or fiction? Expand Medicare, risk solvency

Claim: Allowing people age 55 to 64 to enroll in Medicare will undermine the solvency of Medicare.

This week a group of Democratic senators revived an old idea: Expand the Medicare program, for which the eligibility age is now 65, to people aged 55 to 64. "Allowing people to buy into Medicare at age 55 is a very good idea," said Stephen Zuckerman, a health care economist at the Urban Institute, a non-partisan Washington think tank. "It gives these people the opportunity to join a program that provides excellent access to care to the elderly and disabled population and is able to pay providers at rates that are, on average, well below those of private insurers." But some senators have raised the issue of Medicare's solvency in the decades ahead. The unfunded liability of Medicare's hospital insurance program amounts to $13.4 trillion. Would expansion of Medicare pose a risk to the program's ability to pay its future obligations?

Fact or fiction?
Fiction. Adding new enrollees wouldn't make Medicare's solvency problem any worse, as long as the premiums charged to them were high enough. Assessing a proposal to allow people aged 62 to 64 to buy into Medicare, the Congressional Budget Office said, "measured over the lifetime of participants in the buy-in program, the program would have no direct effect on Medicare's spending" -- if the premiums were high enough to cover the cost of benefits plus administrative costs. Urban Institute economist Timothy Waidmann said premiums could be pegged to an enrollee's income and the government could subsidize lower-income enrollees. "The accounting would largely be separate from the Medicare program, so solvency of the program wouldn't be the issue even if overall costs were high," he said. Requiring high-cost enrollees to pay higher premiums "would insulate the (Medicare) trust fund from further damage."

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