More retiree plans rely on Medicare

Kaiser Health News reported on a trend that more and more companies that provide health insurance to retirees are relying on Medicare. As background, the cost of health care has been increasing faster than inflation for decades. Companies have turned to a variety of cost-saving strategies, including high-deductible plans and higher co-pays. It appears that now, more companies are shifting their retiree plans to Medicare Advantage, where Medicare pays a private insurer a fixed amount per enrollee per month. When companies sponsor Medicare Advantage plans, Medicare subsidizes the cost of the health care (presumably by the same amount that it would pay for individuals who enroll in Medicare Advantage).

This sounds like a great deal for companies (and it is unclear whether there is any significant disadvantages to doing so), but as long as the amounts are the same as individual subsidies, this seems fair (Medicare likely would have paid the same amount for the same individual enrollee if the retirement health plan did not exist). What seems more questionable is that these company-sponsored Medicare Advantage plans can adhere to weaker requirements (for example, they apparently can have a less robust provider network; some other requirements, such as setting their own enrollment deadlines seem reasonable). It is possible that applying uniform standards would make some retiree plans impractical, but relaxing the requirements could also detract from the patient experience. Regardless, this trend appears to be yet another step towards expanded Medicare coverage.