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Raising Medicare's Eligibility Age: A Costly Benefit Cut for Seniors

V I E W P O I N T

Medicare is the principal source of health insurance coverage for over 50 million Americans, including over 8 million disabled workers who have been receiving Social Security benefits for two years or longer. Since the program's inception in 1965, America’s seniors have been able to count on receiving Medicare when they reach age 65. But now, some in Washington who are looking for ways to reduce federal spending want to make seniors wait for up to two additional years - to age 67 - in order to qualify for Medicare.  

Raising the age of eligibility for Medicare from 65 to 67 is a benefit cut. It is being advanced solely for budgetary considerations – to reduce the rate of growth in Medicare spending – with little regard for the harmful consequences for Medicare beneficiaries who have paid into the program during their working lives and count on receiving Medicare.

Communities of color would be hardest hit because they tend to be in poorer health at earlier ages, accumulate less wealth that can be used to pay for health care due to lower lifetime earnings, and have shorter life expectancies on average.

Raising the age of eligibility for Medicare would shift costs to Medicare beneficiaries, employers, and the states. The Kaiser Family Foundation, in a report titled Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform, http://www.kff.org/medicare/8169.cfm, and the Center on Budget and Priority Policies, in a paper, Raising Medicare's Eligibility Age Would Increase Overall Health Spending and Shift Costs to Seniors, States, and Employers, http://www.cbpp.org/files/8-23-11health.pdf,   described who would incur the new health care costs associated with this shift. They are:

  • 65- and 66-year-olds who would lose Medicare coverage and would, on average, face higher out-of-pocket health care costs. Two-thirds of this group - 3.3 million people - would face an average of $2,200 more each year in premiums and cost-sharing charges.

  • Medicare beneficiaries over age 67, as well as people under age 65 who buy insurance through the new health insurance exchanges, would face higher premiums as 65- and 66-year olds would leave Medicare and instead buy coverage through the exchanges.

  • Employers who provide health care coverage to their retirees would face higher costs as more 65- and 66-year olds received primary coverage through their employer rather than Medicare.

  • State Medicaid programs, whose costs would rise as some of the people who lost Medicare coverage would shift to Medicaid.

Raising the Medicare eligibility age would save the federal government money, but it would increase overall health spending. With respect to savings, increasing the Medicare eligibility age to 67 only benefits the federal government; and a recent Congressional Budget Office (CBO) analysis lowered the amount of estimated savings from $113 billion over ten years to $19 billion from 2016 to 2023, or $3 billion per year. On the other hand, the Kaiser Family Foundation (KFF) and the Center on Budget and Policy Priorities estimate that if the proposal were fully in effect in 2014, it would generate $11.4 billion in higher health costs to individuals, employers, and the states. As such, raising the Medicare eligibility age further compounds the overarching problem of system-wide health care inflation.

NATIONAL COMMITTEE POSITION

The National Committee to Preserve Social Security and Medicare opposes any and all proposals that would raise the age of eligibility for Medicare.

  • This change is being advanced solely for budgetary considerations and with little regard to the harmful consequences for Medicare beneficiaries. Clearly, this proposal is just a cost-cutting shift; it doesn't actually reduce health care costs.

  • Medicare beneficiaries, whose average income is less than $23,500 per year, are already spending 26 percent of the average Social Security check on Medicare Parts B and D premiums and cost sharing alone. They cannot afford to pay more for health care costs not covered by Medicare.

  • By shrinking Medicare's share of the health insurance market, raising the eligibility age would reduce Medicare's market power and weaken its ability to serve as a leader in controlling health care costs.

  • Medicare has a proven track record of providing low-cost health care to seniors. Neither seniors nor the Medicare program would be better off if 65- and 66-year olds had to look for health insurance coverage in the private sector.

 

Government Relations and Policy, April 2014



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