Health Insurance Coverage of People Aged 55 to 64: Implications for a Medicare Buy-In

Chris L. Peterson
Specialist in Health Care Financing

Mark Newsom
Analyst in Health Care Financing


Approximately 4.3 million adults between the ages of 55 and 64 were estimated to be without health insurance in 2008, according to the U.S. Census Bureau's Current Population Survey (CPS). This amounts to approximately one out of eight (12.5%) of these adults, often called the "near elderly." 

The near elderly have the lowest uninsured rate among adults aged 19 to 64. This may be driven, at least in part, by where this group is in their life cycle. At this point in their lives, many of the near elderly may be in their peak earning years and be able to access employer-sponsored coverage. At the same time, however, many may be facing important and personally unprecedented health and work decisions, some of which could undermine their access to employer-sponsored coverage. These decisions may be affected by some new challenges this age group faces at this point in their lives: (1) a greater prevalence of chronic conditions; (2) a greater likelihood of certain acute conditions, such as a heart attack and stroke; and (3) more assets to protect from catastrophic health care costs. This report shows that the near elderly are significantly more likely than other nonaged adults to be in fair or poor health, and to have had a heart attack or stroke. More than two-thirds of the near elderly (68.0%) have one of six chronic conditions, a significantly higher percentage than even the next highest age group, 45- to 54-yearolds (51.2%). The near elderly are also more likely to have assets, compared with all other nonaged adult age groups. 

Average per capita health care spending among the near elderly in 2004 ($7,787) was 50% more than among 45- to 54-year-olds ($5,210) and more than double that of 19- to 44-year-olds ($3,370). These spending levels carry over into their health insurance costs. In the nongroup market in 2009, the near elderly faced deductibles averaging $3,022 and annual premiums averaging $5,349. This average premium level exceeded those faced by 45- to 54-year-olds by more than $1,500, and was nearly triple the premiums for 25- to 34-year-olds. The near elderly were more likely than their younger adult counterparts to spend more than 10% of their after-tax income on health care and health insurance premiums. In fact, for those with private nongroup coverage, 69% of the near elderly were in families that spent more than 10% of their after-tax income on health care and health insurance premiums. 

Compared with uninsured 25- to 54-year-olds, the 4.3 million near elderly uninsured are more likely to be female or native-born. This is true even after accounting for underlying population differences between the near elderly and 25- to 54-year-olds. The near elderly uninsured are also more likely to have a household income below $25,000 and to be in poor or fair health. 

Uninsurance can have more severe consequences for the near elderly, considering their increased needs for health care and asset protection. Yet, even the near elderly who have health insurance face much greater financial burdens from these costs than younger adults. 

Extending Medicare eligibility has been one legislative proposal to protect this population from being uninsured or subject to the high costs of the individual insurance market. To keep costs down for the government, it has been proposed that the expansion involve buying into Medicare by paying premiums that cover the actuarial cost of the program. Depending on the specifics of the program, a Medicare Buy-In could raise several potential issues, including adverse selection, high costs to the beneficiary or to the government, additional financial pressures on health care providers and health insurance companies, and incentives for retiring early.


Date of Report: January 14, 2010
Number of Pages: 24
Order Number: RL34596
Price: $29.95

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