At a Glance | October 29, 2020 The Implications of a Medicare Buy-In for Employers Using administrative claims data, EBRI calculated the health care spending of workers aged 50-64 and built a simulation model to estimate who might switch to Medicare if it were made available. SPENDING BY ELIGIBLE WORKERS Share of Total Employer-Sponsored Insurance Spending, by Spending Decile 50–64 Age Group High-spending workers in the 50–64 cohort represent 19 The 50–64 age cohort percent of spending by those 28.4% accounts for a large proportion covered by employer-sponsored 23.6% of spending. If employees insurance; meanwhile, low in that group enrolled in a 19.3% Medicare buy-in program, spenders in that same cohort it would lower employer represent essentially a rounding insurance spending, though error. To examine which workers it could increase the premiums 1.35% for employees remaining on 0.11% 0.007% might switch from their employer the private plan. plan to Medicare, if it were Top Top Top Bottom Bottom Bottom available, and how employers 10% 20% 50% 50% 20% 10% might be impacted, we turn to a simulation model. TESTING SCENARIOS Results From EBRI’s Medicare Buy-In Simulation Model Ages 50–64, Firm Size of 1,000 Employees Our baseline simulation indicates that the median firm Employer Health Care Spending Reduction Assumptions saw a 19.5 percent decrease in Baseline health care spending as a result -19.5% • $1,000 deductible for the private plan Assumption of eligible workers switching • $4,000 maximum out-of-pocket to a Medicare buy-in and taking • No cost difference in premiums between the their spending with them. employer-sponsored plan and the buy-in Sensitivity Analysis We tested several hypotheticals that varied the generosity Lowering or Raising • Deductible lower by $500 (to $500) -18.6% the Deductible of the workplace plan. We show the impact on the firm’s health -21.6% • Deductible higher by $1,000 (to care spending when $2,000) deductibles, out-of-pocket- maximums, or premiums are Lowering or Raising -17.4% • Out-of-pocket max lower by $1,000 changed, causing Medicare to the Out-of-Pocket (to $3,000) Maximum be more or less attractive than • Out-of-pocket max higher by $1,000 -21.6% the workplace plan. (to $5,000) Varying the plan premiums Lowering or Raising -15.0% • Premium higher for Medicare buy-in produced larger differences in Premiums (by $1,000) take-up and spending changes -21.5% • Premium lower for Medicare buy-in than other sensitivity analyses. (by $1,000) SOURCE: Jake Spiegel, “Money Can’t Buy Me Love, but It Might Buy Me Medicare: An Analysis of the Impact of a Medicare Buy-In Policy on Employers,” EBRI Issue Brief, no. 512 (Employee Benefit Research Institute, September 3, 2020). © 2020 EBRI This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, print, or download this report solely for personal and noncommercial use, provided that all hard copies retain any and all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing requires EBRI’s prior express permission. For permissions, please contact EBRI at permissions@ebri.org.