Raising the Medicare Eligibility Age Would Increase Total Health Care Costs
In a recent blog post, Paul Van de Water of the Center on Budget and Policy Priorities (CBPP) discusses why raising the Medicare eligibility age from 65 to 67 would save the federal government money only by shifting expenses to older adults and employers. In fact, Van de Water explains, this change would cause total health care costs to increase, as costs to consumers would be twice as large as any net federal savings. Citing a study conducted by the Kaiser Family Foundation, Van de Water pinpoints the reasons for these increased costs: http://www.kff.org/medicare/med032911nr.cfm
•65- and 66-year-olds, who could no longer depend on Medicare, would pay more on average for premiums and cost-sharing;
•Employers who provide retiree coverage would become primary payers for their retirees under the age of 67;
•Medicare beneficiaries over the age of 67—as well as younger people who purchase health insurance through the state exchanges that will be implemented in 2014—will have higher premiums. As 65- and 66-year-olds seek insurance through the exchanges, the beneficiary pools of both the exchanges and Medicare itself would be older, sicker and more costly;
•State Medicaid costs would rise, as people without Medicare would depend on Medicaid for coverage.
Policymakers who support raising the Medicare eligibility age argue that under the Affordable Care Act (ACA), older adults no longer covered by Medicare would have adequate insurance through state exchanges or Medicaid. Many proposals to raise the Medicare eligibility age assumed that states would be required to expand Medicaid coverage to everyone with incomes below 133 percent of the federal poverty limit up to age 67. However, according to Van de Water, the recent Supreme Court decision that upheld the constitutionality of the ACA, but ruled that the federal government could not withhold states’ existing Medicaid funds for not expanding Medicaid coverage, means a significant number of poor 65- and 66-year-olds would lack affordable health insurance. Moreover, Van de Water writes, more states may refuse to expand Medicaid coverage because they would bear the costs for these individuals, putting the health and financial security of low-income older adults at risk.
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