Employers Should Hire Medicare to Manage Health Insurance Benefits

Proposal

Major employers who want to provide health insurance to their employees should seriously consider pushing for a process to enable Medicare to manage paying the medical bills for their employees and then have the employer reimburse Medicare for the charges with a 3% administrative charge. The employer can choose to cover the full cost or have the employees contribute part of the cost.

Medicare is accepted by most doctors and hospitals all over the United States. In my opinion Medicare is arguably the best health insurance in the US even at 80% coverage. The non covered 20% can be purchased at approximately $200 per month. There are no pre-approval obstacles for needed treatments. Medicare has a good reputation for paying promptly. And the reimbursements to Medicare would be significantly lower than the payments for commercial health insurance. The trend line for Medicare annual cost increases is much lower than commercial insurance.

Annual Medical Cost Data for NYC Employees and Retirees

I recently posted a note outlining the increased cost for health insurance for NYC employees and retirees for the FY-2014 to FY-2023 period. I have done further analysis on the cost data from OLR for the period from 2014 to 2024 period.

Using the GHI charge for Senior Care (20% of the amount paid by Medicare) the health insurance cost for the average Medicare retiree & family in FY-2014 was $12,999 based on the $2,599 payment to Senior Care.

The full cost in FY-2024 was $16,404 based on the $3,280 payment to Senior Care. That was a 26% increase over ten years.

In contrast, the cost for the average employee and family was $10,949 in FY-2014 and $24,325 in FY-2024 (GHI coverage). That is a 122% increase over ten years

The cost of the average non-Medicare retiree and family was $13,080 in FY-2014 and $28,539 in FY-2024 (GHI coverage). That is a 118% increase over ten years.

Medicare retirees usually have more health benefit claims than employees but have smaller families. So, the levels of claims are probably very comparable but not the costs. EmblemHeath administers GHI coverage for NYC. NYC pays EmblemHeath 96% of its $8.4B annual health insurance costs.

Recap

NYC Average Annual Health Insurance Costs

	FY-2014	FY- 2024	% increase over 10 years
Senior Care Costs (20%)	$2,599	$3,280	26%
100% Medicare Retiree Costs	$12,999	$16,404	26%
Employee Costs	$10,949	$24,325	122%
Non- Medicare Retiree	$13,080	$28,539	118%