Cost Savings From Changing Medicare Age Fall Sharply

A new CBO study finds the savings from changing the Medicare age would be much smaller than thought.

A new report from the CBO says a gradual rise in the Medicare eligibility age would shrink federal budget deficits by $19 billion between 2016 and 2023.

A new report from the CBO says a gradual rise in the Medicare eligibility age would shrink federal budget deficits by $19 billion between 2016 and 2023.

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Raising the Medicare eligibility age to 67 may not yield the budget savings as much as previously thought, according to the nonpartisan Congressional Budget Office.

A new report from the CBO says a gradual rise in the eligibility age would shrink federal budget deficits by $19 billion between 2016 and 2023. That's dramatically lower than the $113 billion in deficit reduction the CBO estimated in 2012.

[READ: Will Obamacare Affect Medicare?]

The changed estimate comes in part because the study found Americans joining the insurance program at ages 65 and 66 are healthier than people who joined the program earlier for reasons such as disability. That makes those younger enrollees much cheaper to insure.

In addition, the study finds many 65 and 66 year olds are either still in the workforce or are the spouses of workers and therefore are receiving employer-provided benefits. Those people tend to use Medicare as a supplementary system to their workplace-provided health insurance, therefore costing the Medicare program less money.

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The changed estimate sheds new light on one of the most discussed deficit-cutting options of recent years. Many Democrats have been opposed to raising the age, while Republicans have often championed it. An eligibility age change has come up multiple times in budget talks between President Obama and congressional Republicans. In negotiations during summer 2011's fiscal crisis, President Obama made the concession of discussing the option of raising the eligibility age.

However, the administration has been less willing to budge since then. Earlier this year, Obama nixed the idea of raising the age as part of a deal with Republicans.

 

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