Insuring the middle-aged market
TESS VIGELAND: You’ve heard the number before . . . And we’ll say it again: 46 million Americans have no health insurance. Seven million of them are between the ages of 50 and 64. Old enough to be considering retirement, but too young for Medicare. Well today the AARP announced a plan to reach that group. The powerful senior citizens lobby also expanded its contract with United Health Care. Glenn Melnick is an economist with the Rand Corporation and director of the Center for Health Policy and Management at the University of Southern California.
Thank you for joining us.
GLENN MELNICK: My pleasure.
VIGELAND: Let’s talk about the current crisis facing people in the age bracket of 50 to 64. We often hear about overall numbers. What about the folks in this mid-level here?
MELNICK: The 50 to 64 age range is part of a larger group of folks in America who are at risk of losing, or are losing, health insurance coverage. The folks in that age range are seeing employers who historically have guaranteed insurance for the years after they retire but before they’re eligible for Medicare. We see employers pulling back and taking away that coverage. So, unfortunately, this is a growing segment of uninsured or underinsured in America.
VIGELAND: So what does the AARP announcement today mean for those people. What will they get?
MELNICK: It’s potentially an important announcement. It’a a joint venture with Aetna, which is a large health plan, and they’re actually committed to designing and implementing by January 1, 2008, a new product which will be made available to individuals in the age 50 to 64 who are members of AARP. And there’s 18 million AARP members who are age 50 to 64. So this potentially brings a new solution to the difficult problem of folks in that age range getting health insurance coverage as an individual.
VIGELAND: Will this be able to alleviate the problem?
MELNICK: That will be the challenge. The difficulty in this age range of 50 to 64 is that’s the time in life when people start to have significant health problems. And so this becomes a potentially expensive population, and there’s only two ways that the health plans will be able to handle that. One is by designing benefit packages that reduce spending. Or the other is to try to charge higher amounts for folks who seem to be higher risk. And it’ll be interesting to see how they mix those two approaches to come up with an affordable product for this population.
VIGELAND: Let’s talk briefly about the other announcement that the AARP made today which is that it’s going to be offering and HMO to Medicare recipients.
MELNICK: Well, that’s right. It’s actually a continuation of an existing agreement between United Health Care and AARP to jointly market the Medicare Advantage product, which is an HMO to the Medicare population. And there’s a couple significant features about this new agreement. One is it’s a seven-year contract between the two organizations. But, as part of that, United Health Care has agreed when they sell an insurance product to an AARP member, they guarantee that they can be enrolled for at least two years. And that’s important because the Medicare HMO program over the years has seen periods where large companies have decided they no longer want to serve a particular area and they pull out or withdraw from that area fairly quickly. And what this agreement does is it protects its members by saying, “If you sign up, you know for sure we’re going to be here for at least two years.”
VIGELAND: Glenn Melnick is an economist and health policy expert with the Rand Corporation. Thanks for coming in.
MELNICK: My pleasure.
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