Building an Economy that Works for Everyone

Raising the Medicare eligibility age will cost everyone more


Raising the age for Medicare eligibility from 65 to 67 is front and center in the GOP plan to avoid the fiscal cliff slope – but it’s merely a budgetary sleight of hand that shifts costs to seniors and their families, employers and the states.

As a Kaiser Family Foundation report explains, 65- and 66-year-olds are the healthiest cohort in the Medicare population. Bar them from it, and the pool of participants becomes smaller and less healthy – and therefore more expensive.

Kaiser’s report finds five million 65- and 66-year-olds would not have access to health care as of 2014 if the Medicare eligibility age were increased.* In that group, 42% would turn to employer-sponsored plans, 38% would enroll in the newly-formed state health care exchanges, and 20% would be covered under Medicaid.

At the end of the day, raising the eligibility age for Medicare would reduce federal spending by $5.7 billion in 2014, but it would cost everyone else a lot more. Here’s who would pay – and how much:

  • Employers: costs are projected to increase $4.5 billion for employers who are covering an older population;
  • 65 and 66 year olds: 2/3 of these seniors will pay more out of pocket than they would have under Medicare;
  • Everyone else: Premiums in state health exchanges will rise for everyone under 65 by 3% (or about $141 per person) due to the shift in the risk pool;
  • Medicare Part B premiums will increase by 3%.
  • States: Costs to states are expected to increase $700 million.

As Paul Keckley, executive director of the Deloitte Center for Health Solutions in Washington, puts it:

Raising the eligibility age is math that works very well for reducing the federal outlay for Medicare. It doesn’t mean costs will go away. It’ll be someone else’s problem.

Pushing health care costs into a more expensive private market isn’t the answer – especially when millions of Americans have paid into Medicare their entire working lives in exchange for the promise of available and affordable health care when the retire. Raising the eligibility age for Medicare isn’t just short-sighted – it will have a profoundly negative impact on people nearing retirement, as well as the broader economy.

* The Kaiser report assumes full implementation in 2014, rather than the more common assumption of a gradual increase, to illustrate the likely effects once fully phased in.

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