Raising Medicare’s Eligibility Age Would Raise Costs, Not Reduce Them
Posted by: Paul N. Van de Water
Posted in: Congressional Action, Deficits and Projections, Federal Budget, Federal-State Issues, Health Policy, Health Reform, Insurance Coverage, Medicare, State Budget and Tax
Raising Medicare’s eligibility age from 65 to 67 figures to be one option before the new congressional “supercommittee” on deficit reduction, and there’s speculation that the Administration will include it in the budget plan that it will release after Labor Day. As former Obama White House advisers Ezekiel Emanuel and Jeffrey Liebman argue in today’s New York Times, this proposal is a “classic example” of “cost-shifting cuts [that] don’t actually reduce health care spending, they just shift costs from the government to the private sector.” In fact, it would raise overall health care spending, as we explain in a new report.
Raising Medicare’s eligibility would save the federal government money by shifting costs to individuals, employers, and states. These increased costs would be twice as large as the net federal savings, according to a study by the Kaiser Family Foundation. (See figure.)
- 65- and 66-year-olds losing Medicare coverage would face higher out-of-pocket health care costs, on average. Two-thirds of this group — 3.3 million people — would face an average of $2,200 more each year in premiums and cost-sharing charges.
- Employers that provide health coverage to their retirees would face higher costs as more 65- and 66-year-olds received primary coverage through their employer rather than Medicare.
- Medicare beneficiaries, as well as people under age 65 who buy insurance through the new health insurance exchanges, would face higher premiums as 65- and 66-year-olds left Medicare and many of them bought coverage through the exchanges.
- State Medicaid costs would rise as some of the people who lost Medicare coverage would shift to Medicaid.
That’s not all. By shrinking Medicare’s share of the health insurance market, raising the eligibility age would reduce Medicare’s market power and weaken its ability to serve as a leader in controlling health care costs. Moreover, if Congress repealed the health reform law, as the House has voted to do, large numbers of 65- and 66-year-olds who lost Medicare would end up uninsured. For all of these reasons, raising the eligibility age would be a large step backward.