Raising Medicare Eligibility Will Hurt Seniors, States, and Employers
Raising the Medicare eligibility age brokers a political deal on the backs of elderly Americans
December 6, 2012
The most frustrating thing about proposals to raise the Medicare eligibility age from 65 to 67 is that those who advocate the hike take for granted that it's an oh-so-logical approach to controlling healthcare spending. "People are living longer, so isn't [the current] age sort of outmoded and isn't that a good thing to address long-term?" Fox News host Martha MacCallum pointedly asked Democratic Rep. Chris Van Hollen on her program last week.
To be fair to MacCallum, she is by no means alone in propagating this demonstrably shallow logic. Raising the Medicare eligibility age is now part of House Speaker John Boehner's "counter-offer" to President Barack Obama on the so-called "fiscal cliff," and as budget negotiations proceed, there are reports that prominent Democrats—including President Obama—have been flirting with the idea, too.
But the reality is, once you delve into the mechanics and consequences of raising the Medicare age on a deeper level than "people are living longer," it becomes glaringly obvious that such a move would hurt seniors, states, and employers—all without achieving significant Medicare savings or addressing the actual roots of our healthcare cost crisis.
Let's walk through the practical implications of raising the age. First, the obvious: Implementing the eligibility hike means that seniors who retire earlier will have to wait longer to qualify for benefits. That's a pretty big deal for seniors, especially ones with spouses younger than them, since couples jointly qualify for Medicare once one party has reached the eligibility age.
Next, you have to ask, where will these seniors between ages 65 and 67 go for their coverage? They could postpone retirement—but that means higher healthcare costs for their employers. They could go to Obamacare's insurance exchanges—but many seniors will have high enough incomes that they don't qualify for sufficient subsidies to get the plan they need, potentially forcing them to forgo insurance or care. Then there's the fact that shifting seniors from Medicare into the exchanges would make both of those insurance pools older, sicker, and costlier to cover, thus raising premiums for Americans in the exchanges as well as for Medicare Part B beneficiaries. And the icing on the cake? CBO says that even after all this shifting and asymmetric cost-sharing, raising the eligibility age would produce slim, nominal savings.
This is one of those policy proposals that make for a sensible-sounding pitch, but proves to be a shoddy deal on second glance. Shifting costs onto providers and people who actually need care will do nothing to address long-term trends in healthcare spending. Raising the eligibility age isn't serious entitlement reform—it's moving around some furniture and brokering a political deal on the backs of sick and elderly Americans.