Why Raising The Medicare Eligibility Age Is A Bad Idea
Earlier this summer, there were reports that as part of the debt ceiling negotiations President Obama proposed raising the Medicare eligibility age from 65 to 67, but that was before talks with Speaker John Boehner (R-OH) broke down. Now as the president plans to present his deficit-cutting plan next week, the speculation continues about whether the Medicare eligibility age is on the table.
Outside groups have weighed in, with the health care industry favoring the change, including the Healthcare Leadership Council (a coalition of health industry CEOs) and the American Hospital Association, and patient protection groups opposing it. However, the bottom line is: raising the Medicare eligibility age is bad for seniors and doesn't really help the deficit problem.
According to the Kaiser Family Foundation, raising the eligibility age to 67 would result in 5 million people that would be without Medicare in 2014 and a net increase in out-of-pocket costs of $3.7 billion. As Peter Van de Water at the Center for Budget and Policy Priorities (CBPP) explains:
Under the health reform law (the Affordable Care Act, or ACA), seniors no longer eligible for Medicare could obtain coverage through Medicaid or the exchanges. But raising the age of eligibility for Medicare would substantially boost out-of-pocket costs for 65- and 66-year-olds, which many of them with modest incomes could have difficulty affording, prompting some to become uninsured and others to forgo needed care. It also would raise health care costs overall.
Kaiser breaks down how 65- and 66-year-olds would obtain coverage in this scenario, with 38 percent of them getting coverage through the health insurance exchanges, where half of them would be eligible for subsidies. Forty-two percent are expected to receive coverage from an employer either because they remained actively working beyond the age of 65 or through an employer-sponsored retiree health plan. And 20 percent would be covered by Medicaid.
Van de Water notes that "the Kaiser study assumes for the sake of simplicity that everyone who would lose Medicare coverage would obtain health insurance coverage elsewhere ... In reality, however, many of these 65- and 66-year-olds are likely to end up uninsured."
And while the change would produce a net federal savings of $5.7 billion, it is not as significant a reduction as anticipated because the federal savings is offset by the foregone Medicare premium payments from those aged 65 and 66, as well as the increased cost for covering the new Medicaid enrollees and the costs of premium subsides in the exchanges.
So the plan to raise Medicare eligibility age would produce only $5.7 billion in savings while costing seniors, states, employers and others and estimated $11.4 billion without getting to the root cause of rising health care costs in this county.
Raising the Medicare age simply means more uninsured Americans who will get hit with higher out-of-pocket costs, and higher costs for the rest of us that will only garner less than 1/5 of the promised savings.