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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Thursday, January 29, 2009

Eliminating Waiting Period for Medicare

Harold Pollack writing at Ezra Klein's blog discusses another way to help stimulate the economy - elimination of the two-year waiting period for disabled people to receive Medicare.  He explains,

      

This waiting period goes back to 1972, when Congress expanded Medicare eligibility to include the disabled. Under current policy, people with disabilities must receive Social Security Disability Insurance (SSDI) for 24 months before becoming Medicare-eligible. Exceptions have been added for end-stage renal disease and ALS. Some states step in to fill the gap. Yet this policy imposes severe problems on many people. According to the Congressional Budget Office (CBO), roughly 1.8 million SSDI beneficiaries are now in the waiting period for Medicare coverage.  (See Option 19 in their huge report.)

There are policy-analytic arguments to support current policies—Medicare does not want to assume burdens rightfully borne by private insurers or to finance care for temporary disabilities. The program did not want to strengthen perverse incentives to remain uninsured. A nice Commonwealth Fund report by Stacy Berg Dale and James Verdier details these issues. (In one of those small-world moments, I was Verdier’s teaching assistance nearly two decades ago.) As we move into a world aspiring to universal coverage, increased protection for people with preexisting conditions, and perhaps even some flavor of individual mandate for insurance coverage, original arguments for the waiting period seem outmoded, and outweighed by the resulting human cost.

Berg and Verdier’s 2003 report is now a bit dated, but it remains the best single information source. Their work suggests that up to 400,000 uninsured people with serious disabilities might be helped by changes in this policy.

The National Multiple Sclerosis Society and pretty much every similar advocacy group have spoken out against the waiting period. Pending House and Senate bills propose to phase out the waiting period over the next decade and to grant more exceptions for people with life-threatening illnesses. The House version, HR 154, has 104 cosponsors. The Senate version, S2102, has 23 cosponsors. I am especially heartened that the issue is raised in Senator Baucus’s vaunted white paper on health reform.

CBO has sussed out various proposals to reduce or eliminate the waiting period. Eliminating the waiting period entirely would increase federal outlays by about $41 billion between 2010 and 2014, and would cost about $12 billion per year once it is fully implemented. This calculation reflects a shift in federal spending from Medicaid onto Medicare of about $32 billion between 2010 and 2019, because Medicaid plays an important role in filling the current gap. (This calculation nicely illustrates CBO’s essential role in getting complicated numbers right. Don’t try this at home.)

CBO doesn’t report the billions of dollars that states would save by reducing this Medicaid burden. My perilously rough calculation based on Dale and Verdier’s work suggests that states would save in the neighborhood of $2.4 billion annually, were SSDI recipients made immediately Medicare-eligible. . . .

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