Raising Medicare Age Will Increase Cost for People of All Ages
Pushing up the eligibility age will hike prices across the healthcare system
December 6, 2012
Raising the age for Medicare eligibility would be a costly step in the wrong direction, and not just for the 65 and 66 year olds who risk losing access to healthcare they can afford. This proposal would do nothing to reduce healthcare costs and merely shift billions of dollars in expense to employers, Medicaid, younger people, state governments, even hospital emergency rooms. And it would save far less for Medicare than its proponents hope.
The dangers in this proposal become clear when you consider the assumptions it relies on. For example, advocates assume that people no longer eligible for Medicare would find adequate protections through new health insurance exchanges and Medicaid expansions approved in the Affordable Care Act.
But would they? Until the exchanges and the Medicaid expansion are fully implemented in all states, we're concerned that many low- and modest-income 65 and 66 year olds could lose healthcare coverage altogether. Even then, coverage for these individuals isn't guaranteed. Others in that age group would have to pay a lot more—an average of $2,200 extra, according to the Kaiser Family Foundation. (This calculation is for individuals not eligible for Medicaid or tax credits that will go to people with modest incomes, and it assumes the exchanges are a real option in 2014.)
We also know that when people face steep hikes in healthcare costs, they forego care. That allows conditions to get worse and pushes costs higher for Medicare in the long run.
Raising the Medicare age will increase costs for people of all ages, due to the way insurance rates are calculated. By steering 65 and 66 year olds into the new exchanges, health insurance costs are projected to rise for all who participate, because those markets will be serving a less healthy, costlier population. By keeping this same group out of Medicare Parts B and D, costs will go up for the remaining Medicare beneficiaries, who on average will be less healthy and costlier.
The arithmetic argues against raising the age for Medicare eligibility. A Kaiser study found that in 2014 the proposal would save the federal government $5.7 billion, but it would also foist $11.4 billion in higher spending onto individuals, states, and employers.
We need to work much harder on containing costs in the broader healthcare system, of which Medicare is one part. That's the fair and sustainable way to achieve healthcare savings in the budget.
Taking the protections of Medicare away from 65 and 66 year olds is not the answer.