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Date: Tuesday, January 6, 1998
WHITE HOUSE FACT SHEET
Contact:  HHS Press Office  (202) 690-6343

President Clinton today announced a targeted, paid-for proposal to give Americans under 65 new options to obtain health care coverage. The president's proposal:

• Enables Americans Ages 62 to 65 to Buy into Medicare, by paying a full premium.
• Provides Vulnerable Displaced Workers 55 and over Access to Medicare, by offering those who have involuntarily lost their jobs and their health care coverage a similar Medicare buy-in option.
• Provides a New Health Option to Americans 55 and over Whose Companies Reneged on Their Commitment to Provide Retiree Health Benefits, by extending "COBRA" continuation coverage until age 65.

Americans ages 55 to 65 are one of the most difficult populations to insure: they have less access to, and a greater risk of losing, employer-based health insurance; and they are twice as likely to have health problems. Some lose their employer-based health insurance when their spouse becomes eligible for Medicare. Many lose their coverage when they lose their jobs due to company downsizing or plant closings. Still others lose insurance when their retiree health coverage is dropped unexpectedly.

These older Americans are often left to buy into the individual insurance market, which can be prohibitively expensive (in some cases, more than $1,000 per month for a person with a pre-existing condition) and altogether unavailable for many older Americans with health problems. In virtually all states, people purchasing individual policies pay much higher insurance rates when they have a pre-existing condition; in many states, these same people can be denied coverage altogether.

The president's targeted proposal provides greater access to health coverage by:

• ENABLING AMERICANS AGES 62 TO 65 TO BUY INTO MEDICARE, by paying a premium. The premium would be paid for in a two-part "payment plan." First, participants would pay a base premium of about $300 per month -- the average cost of insuring Americans this age range. Second, participants would pay an additional monthly payment, estimated at $10 to $20, for each year that they buy into the Medicare program. This premium, to be paid once participants enter Medicare at age 65, covers the extra costs of sicker participants. This two part "payment plan" enables these older Americans to buy into Medicare at a more affordable premium, while ensuring that the buy-in option is self-financing in the long run.
• PROVIDING VULNERABLE, DISPLACED WORKERS OVER 55 ACCESS TO MEDICARE by offering those who have involuntarily lost their jobs and their health care coverage a similar Medicare buy-in option. Individuals choosing this option would pay the entire premium at the time they receive the benefit without any Medicare "loan," in order to ensure that Medicare does not pay excessive up-front costs and participants do not have to make large payments after they turn 65. This policy responds to the increased vulnerability of older Americans to work transitions and company layoffs. Such workers have a harder time finding new jobs: only 52 percent are reemployed compared to over 70 percent of younger workers. Nearly half of these unemployed, displaced workers who had health insurance remain uninsured.
• PROVIDING AMERICANS OVER 55 WHOSE COMPANIES RENEGED ON THEIR COMMITMENT TO PROVIDE RETIREE HEALTH BENEFITS A NEW HEALTH OPTION by extending "COBRA" continuation coverage until age 65. This proposal allows these retirees to buy into their former employers, health plan through age 65 by extending the availability of COBRA coverage to these families. In recent years, the number of companies offering retiree benefits has declined: in 1993, only about half of full-time workers in medium-to-large firms had access to retiree health insurance, compared to 75 percent in 1985. Some companies have ended coverage only for future retirees, but others have dropped coverage for individuals who have already retired. This policy provides much needed access to affordable health care for these retirees and their dependents whose health care coverage is eliminated after they have retired. Retirees would pay a premium similar to that of other COBRA participants.

• THE POLICY IS DESIGNED TO BE SELF-FINANCING. All three proposals are designed to be paid for by the people who benefit. People ages 62 to 64 who buy into Medicare would, over time, repay the amount that Medicare "loans" them when they are buying in. Displaced workers would pay a premium that takes into account participants, costs. And, the COBRA buy-in policy has no Federal budget impact whatsoever.
• ANY TEMPORARY COSTS ARE OFFSET BY PROPOSALS TO REDUCE MEDICARE FRAUD, ABUSE AND WASTE. The short-term Medicare "loan" to buy-in participants, plus the costs of the displaced workers, buy-in, cost approximately $2 to $3 billion over 5 years. These costs are financed by a series of new Medicare anti-fraud and waste proposals, which will be announced in the president's budget.