NEAR ELDERLY: GAO Says Access To Coverage In Jeopardy
The declining number of employers that offer health benefits to retirees "clouds the outlook" for near-elderly Americans, a new report by the federal General Accounting Office finds. Fourteen percent of people 55 to 64 are uninsured -- fewer than are uninsured among the entire nonelderly population (GAO report 98-133). Senate Labor Committee Chair James Jeffords (R-VT), who commissioned the report, said the study "found several disturbing trends that could lead to a substantial increase in the numbers of near-elderly without health insurance coverage." The GAO said a major reason for future declines in near-elderly coverage is the dwindling number of companies that "provide stopgap insurance" to employees who retire before they are old enough to qualify for Medicare. The AP/Los Angeles Times reports that "rising health care costs, corporate takeovers, foreign competition and the waning influence of organized labor" could be leading some large employers to drop retiree coverage. And "the GAO said even companies continuing to offer retiree health benefits are raising the bar for eligibility -- by requiring more years of service, for example -- or asking retirees to foot a bigger share of the bill" (Love, 6/25).
The GAO also found that future retirees may have to pay more for their coverage, though "trends in employers' required retiree cost sharing are ... difficult to decipher." And if retirees find themselves without employer-based coverage, they may have difficulty getting health coverage another way -- since they "are more likely to experience health conditions such as diabetes, hypertension and heart disease," the GAO said. Changes in health and income status can make private insurance too expensive -- the near-elderly spend 45% more on health care services than individuals between 45 and 54, and their median family income is about 25% lower (GAO report 98-133). In testimony before Jeffords' committee last week, Brandeis University's David Shactman said fewer near-elderly people work, another reason for the decline in coverage. "In 1960, over 85% of near elderly males were employed," Shactman said. "By 1995 that had fallen to 65% -- a sea change in the work habits of the near elderly," he said (Marlowe, Richmond Times-Dispatch, 6/27). The GAO study also reports that the near-elderly rarely enroll for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), possibly because of the high cost of enrolling (GAO report 98-133). "The bottom line is that future retirees will pay more for coverage and find it harder to become eligible for benefits," the AP/Times reports (6/25). Click here to see a PDF version of the GAO study.
Answers From The HIAA
Health Insurance Association of America COO Chip Kahn told the Senate Labor Committee last week that tax reforms and subsidies stemming from the existing private health insurance system are a better way to expand coverage to the near-elderly and other uninsured Americans than narrow government programs. "Affordability is the primary factor behind a lack of insurance," Kahn said. "Using the tax code to enable more Americans to be able to purchase health insurance coverage has the twin advantages of building on the existing private health care system, and not burdening the existing Medicare program." Kahn called a Clinton administration plan to allow near-elderly Americans to buy into Medicare "unwise," adding that it "does little to address the problem of affordability." He said three proposals before Congress would build on the existing private sector system -- two bills that would allow full deductibility of health insurance premiums by people who lack employer-sponsored coverage and one that would increase deductibility of premiums for the self-employed (HIAA release, 6/25).