Medicare Part D Expands as 55+ year Olds Buy In?

The Senate public compromise includes an option for those Americans who are 55 years old or older to purchase health coverage via Medicare. While much of the details haven't been released yet, and the Senate waits for the cost tab from the CBO, let's take a quick look at what it might mean for Pharma.

First, Medicare enrollment by this new age group is likely to be limited to those who don't already have insurance or those who purchase insurance on an individual basis. Kaiser Family Foundation (KFF) reports that 12% of Americans in the 55 to 64 year old group don't have health insurance. This amounts to 4.3 million people. The number in this age group purchasing individual insurance, according to KFF, is 2.1 million. This brings the total of 55+ year olds likely to have an option to buy-in to Medicare at 6.4 million.

The big question on the table is what percentage of the younger Medicare eligibles will actually enroll in Medicare? But-in premium estimates have been placed at $7,600 to $8,000 per enrollee (this can be compared to the $11,000 or so Medicare currently spends on each enrollee). Interestingly KFF reports the average premium, $5,400, in this age group is a lot less than the reported Medicare buy-in. Undoubtedly there will need to be subsidies extended to the lower income uninsured as there will be in the exchanges.

My guess at the moment is that the sicker might opt for Medicare but the rest will find better plans at lower costs in the exchanges. Either way, the uninsured, either through the exchanges or through Medicare, will have Rx coverage (assuming those opting for Medicare will opt for Rx coverage via Part D). I therefore don't see much of a near-term impact on Pharma at this juncture if the Senate ultimately adopts this provision. If this aspect of the great compromise moves forward, and further details are available, I'll have a closer look.