V I E W P O I N T

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

Medicare is the principal source of health insurance coverage for nearly 48 million Americans, over 39 million Americans ages 65 and older and 8 million disabled workers who have been receiving Social Security benefits for two years or longer. Medicare is a comprehensive package of health care insurance. Part A of Medicare, which covers hospital insurance, is financed through workers' Social Security tax contributions. Part B, which covers seniors' doctor bills and other out-patient services, and Part D, which provides prescription drug coverage, are financed through monthly premiums paid by beneficiaries and by general revenues.

Raising the Age of Eligibility for Medicare

For 46 years, 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 Medicare's age of eligibility would affect all Americans, including those who are already over the age of 67 who would end up paying higher premiums as a result of the change.

Proposals to raise 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 recent 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 the cost of health care for everyone else. Certainly, seniors affected by this proposal would pay more for their health care coverage. Employers and anyone else who purchase private sector health insurance would end up paying more for their coverage.

In fact, the Kaiser Foundation and the Center on Budget and Policy Priorities reports conclude that the "increased state and private-sector costs would be twice as large as the net federal savings. If the proposal were fully in effect in 2014, Kaiser estimates, it would generate $5.7 billion in net federal savings but $11.4 billion in higher health costs to individuals, employers, and the states."

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 $22,000 per year, are already spending 27 percent of the average Social Security check on Medicare Parts B and D 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, September 2011

The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.