A Plan for the Jobless and Early Retirees

President Clinton announced last week that he wants to open Medicare to people as young as 55.

The White House says this would offer security for victims of corporate layoffs who can’t get affordable health insurance because of their age or medical condition--and it would protect early retirees who are a bit too young to qualify for Medicare, which begins at age 65.

Republican leaders of Congress say it is a bad idea to expand Medicare, the fastest-growing federal program. Medicare already faces severe long-range financial pressures from the 76 million members of the baby boom generation, some of whom become eligible for Medicare benefits in 14 years.

Congress will spend much of this election year debating Clinton’s proposal.

Here is a guide to what it means.

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Question: How many people could be affected?

Answer: About 3 million people from 55 to 65 are uninsured. An additional 2 million already have individual insurance, but some members of this group who have significant health problems might want to exchange their costly private policies for the government program. The total potential audience is from 3 million to 5 million. (The total population age 55 to 65 is 22 million, with the vast majority covered by health insurance through work or a spouse’s work.)

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Q: What is the Medicare “buy-in” we’ve been hearing about?

A: People already on Medicare--those older than 65 and the disabled of all ages--pay $43.80 a month as a premium for Medicare coverage.

Under the Clinton plan, people from 62 to 65 would be allowed to “buy into” Medicare by paying a base premium of $300 a month--the government’s estimate of the average cost of insuring a person that age.

There would be an additional payment of $10 to $20 a month for each year the person participates in the buy-in. But this extra payment would not be made until the person turns 65 and enrolls in the regular Medicare program.

For example, suppose Jane Jones buys in at age 62. She pays $300 a month until she is 65. She joins Medicare and begins paying its regular monthly premium, plus $30 to $60 a month more for her earlier enrollment.

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Q: Who would benefit from this buy-in at age 62?

A: Early retirees and younger spouses of workers who have already reached 65 and qualify for Medicare. The younger spouses, usually women, are not yet old enough for Medicare coverage.

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Q: What is the coverage for displaced workers?

A: Workers 55 and older who have lost health coverage because they lost their jobs would be eligible for a buy-in program.

Such people would qualify for the buy-in when applying for unemployment insurance.

The cost would be $400 a month for an individual, who would then become eligible for full Medicare coverage, which includes hospital charges and doctor bills. (Medicare does not pay for prescription drugs.) The Clinton administration has not yet decided whether the buy-in should include spouses and children, which could raise the cost beyond $400 a month. Someone who loses a job could keep the coverage until finding a new job with health insurance, or until age 62 when he or she could buy into Medicare for $300 a month.

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Q: Is the program at $400 a month a good deal for workers who have lost their jobs?

A: It depends. Private market policies vary widely in cost, depending on the local market, the insurance company and the health of the individual involved.

In L.A. County, a healthy individual who is 55 could find a policy for about $160 a month for herself and $450 for her family. The same coverage might be 50% less in a rural county in the northern part of the state. A person with health problems could find coverage much more expensive. Some rates might soar as high as $1,000 a month for those with severe problems, according to analysts.

People with serious health problems might find coverage unavailable at any price--for them, the $400 monthly charge would be a good deal.

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Q: What are the drawbacks of this plan?

A: It is comparatively expensive: $400 a month is a lot of money for somebody just out of a job.

Skeptics say the coverage would attract only those already in poor health, those who are sick or who expect to be sick soon. The cost of covering them could cause big losses for Medicare. The Clinton administration contends that $400 a month would cover the full cost, making the program self-financing. But nobody can be sure how many people would join and how costly their medical bills might be.

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Q: What does the program offer for retirees?

A: It promises help for people 55 and older who retired with the promise of health coverage but find later that the insurance has been canceled by their former companies.

Under current law, a person who leaves a job that offers health insurance can continue this coverage for 18 months, in return for paying the full cost of the insurance--both the worker’s and employer’s share--plus an administrative fee of 2%.

If the president’s plan becomes law, this period of extended coverage could be increased to a maximum of 10 years until the person reaches age 65. And the administrative fee could be as high as 25%, to help pay for the added health bills of people nearing age 65.

Take the fictitious case of Carl Martinez, who takes early retirement at age 61. He has a very high cholesterol count and high blood pressure that require medication. His employer promised to pay retiree health coverage, but then canceled the program.

The administration’s proposal would allow Martinez to continue with company health insurance as if he were still working.

The company spends $350 a month on comprehensive health insurance for each worker. Workers pay 30%, $105 a month; the company pays $245. Martinez, under the administration’s proposal, would pay the full $350 a month plus an extra administrative charge, up to 25%, or $87.50, totaling $437.50 a month.

Martinez would be guaranteed coverage at $437.50 a month for four years, until he turns 65 and is eligible for Medicare.

Here are some Medicare numbers.

* For the Medicare Beneficiary Handbook, call (800) 675-2266.

* For questions about Medicare, medigap or long-term care insurance, call the state Health Insurance and Advocacy program at (800) 434-0222.

* To report fraud, call (800) 447-8477.

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This column appears every second Monday in Health. Send your questions, worries, tips, successes or failures in living with the health insurance revolution to Benefits Bob Rosenblatt, Health, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Or e-mail: Bob.Rosenblatt@latimes.com.