Changing Medicare eligibility age shifts costs to employers, younger seniors
MENLO PARK, Calif. — Raising Medicare’s eligibility age from 65 to 67 years in 2014 would generate an estimated $7.6 billion in net savings to the federal government, but also would result in an estimated net increase of $5.6 billion in out-of-pocket costs for 65- and 66-year-olds, as well as $4.5 billion in employer retiree healthcare costs, according to a new Kaiser Family Foundation projection of the potential change suggested by several deficit-reduction plans.
"Raising Medicare’s age of eligibility would obviously reduce Medicare spending, but also would shift costs onto seniors and employers, and increase costs elsewhere on the federal ledger," stated Kaiser Family Foundation VP Tricia Neuman, who leads the new Kaiser Project on Medicare’s Future. "This analysis drives home the tough policy choices that lie ahead when Washington gets serious about reducing the federal deficit."
Several major deficit-reduction and entitlement reform proposals include raising Medicare’s age of eligibility to 67 years old as a way of improving Medicare’s solvency. The new Kaiser study is the first to estimate the expected effects on seniors’ out-of-pocket costs and other stakeholders in light of last year’s health-reform law.
The study also estimated that the change in Medicare eligibility would raise premiums by 3% for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges. The study assumed both full implementation of the health-reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal.
Among the estimated 5 million affected 65- and 66-year-olds, about 3-in-4 would pay an average of $2,400 more for their health care in 2014 than they would have paid if covered under Medicare, the study estimated. Nearly 1-in-4, however, are expected to have lower out-of-pocket spending, mainly due to the health-reform law’s coverage expansions through Medicaid and the premium tax credits available to low- and moderate-income Americans.
In the absence of the health-reform law, raising Medicare’s age of eligibility would result in an increase in the uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market in the absence of Medicare.
With health reform, virtually all 65- and 66-year-olds would be expected to obtain alternative sources of coverage. According to the new analysis, 42% are projected to obtain coverage through employer-sponsored plans, 38% through plans offered through health reform’s insurance exchanges and 20% through the expansion of Medicaid for low-income adults.
The study projected that raising the age of Medicare eligibility to age 67 years in 2014 would result in $31.1 billion in gross Medicare savings in 2014 because Medicare no longer would be covering 65- and 66-year-olds. The gross savings are estimated to be partially offset by increases in federal spending for individuals who would be covered by Medicaid ($8.9 billion) and for individuals receiving premium tax credits in the exchanges ($7.5 billion). The gross savings also would be offset by a $7 billion reduction in Medicare premium receipts from 65- and 66-year-olds who no longer would be enrolled in the program.
In addition, the study found that healthcare costs for employers would increase by an estimated $4.5 billion in 2014 as employer plans become the primary payer for 65- and 66-year-olds who no longer would be eligible for Medicare, rather than provide supplemental coverage that wraps around Medicare.
Other key findings from the study include:
Premiums for people younger than 65 years purchasing coverage through health reform’s insurance exchanges would rise by an estimated 3%, as a result of adding 65- and 66-year-olds to the exchanges;
Similarly, Medicare Part B premiums would rise by an estimated 3%, as the youngest seniors are removed from the Medicare risk pool, resulting in higher per-beneficiary costs for those remaining on Medicare; and
Costs to states would increase by an estimated $700 million overall. This reflects higher state Medicaid costs associated with 65- and 66-year-olds who otherwise would be dual eligibles (covered by both Medicare and Medicaid) and also from higher costs associated with higher Medicare premiums for remaining dual eligible beneficiaries for whom Medicaid pays the Medicare premiums. Those higher costs are offset in part by some affected beneficiaries qualifying for full federal funding under health reform’s Medicaid expansion.
The study, "Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform," is the first in a new series of Kaiser Family Foundation studies examining the effects of proposed Medicare changes on the program’s beneficiaries, the federal budget and other stakeholders as part of the Kaiser Project on Medicare’s Future.
The study is authored by researchers from the Kaiser Family Foundation and Actuarial Research and is available online.
Dr. Reddy’s generic Xyzal hits market
HYDERABAD, India — Indian generic drug maker Dr. Reddy’s Labs has launched a generic treatment for seasonal allergies, the company said Tuesday.
Dr. Reddy’s announced the launch of levocetirizine tablets in the 5-mg strength. The drug is a generic version of UCB’s and Sanofi-Aventis’ Xyzal.
Levocetirizine had sales of about $238 million during the 12-month period ended in September 2010, according to IMS Health.
Datamonitor: Global biosimilars market to reach nearly $4 billion by 2015
LONDON — Any manufacturer that has the necessary resources and still is hesitating about whether to tap into biosimilars might want to go ahead and do it, if projections by British market analysis firm Datamonitor come true.
The firm released a report Monday showing that the global biosimilars market, whose value stood at $243 million in 2010, will increase to $3.7 billion by 2015.
“With the market shares of first-generation biologic drugs stagnating or declining, biosimilar monoclonal antibodies and second-generation biosimilars represent a high-value proposition for biosimilar manufacturers and key drivers for future growth,” Datamonitor healthcare analyst Mark Hollis said.
“However, despite the introduction of biosimilar approval pathways in the [United States, European Union] and Japan, the growing use of biologics and the need for more cost-effective treatments, there remain large numbers of barriers to achieving commercial success in developed markets,” Hollis added.
More than 30 biologics with sales of $51 billion will lose patent protection between this year and 2015, thus opening opportunities for biosimilar manufacturers. Currently, Teva Pharmaceutical Industries, Sandoz and Hospira are the largest manufacturers of biosimilars — primarily for the European Union — though such generic drug companies as Mylan and such branded drug makers as Pfizer and Merck have expressed interest as well. Datamonitor’s report forecasted that the market in the United States, Europe and Japan would remain dominated by existing biosimilar manufacturers, with a few branded companies joining in as well.