The cost of raising Medicare's eligibility age

Raising the Medicare eligibility age to 67 from 65 would cost states and private payers about twice as much as it would save the federal government, according to this graph from the Center on Budget and Policy Priorities’ Paul Van de Water. The change would net the federal government $5.7 billion in savings if enacted in 2014. But it would also increase health care costs for many other health care payers, to the tune of $11.4 billion. You can see how that breaks down above.

It’s little surprise that raising the Medicare eligibility age would shift costs to the private sector; someone would still foot these health bills. But how does the change suddenly double the cost of caring for the same group of seniors? That price difference likely stems from Medicare’s efficiency as a health delivery system. The program has consistently seen lower cost growth than private insurance plans.

As I’ve written previously, raising the Medicare eligibility age would also be a blow to health reform’s insurance exchanges, causing premiums there to rise. And here’s more from Van de Water, who draws largely on a Kaiser Family Foundation report last month, on what else it would do:

●65- and 66-year-olds would face higher out-of-pocket health care costs, on average. 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.

●State Medicaid costs would rise as some of those who lost Medicare coverage (those with the lowest incomes) would obtain coverage through Medicaid instead.

●Employer costs would rise as more 65- and 66-year-olds whose employers offered coverage to their retirees received primary coverage through their employer rather than Medicare.

●All Medicare beneficiaries would pay higher premiums because the removal of 65- and 66-year-olds, who are typically healthier than the overall Medicare beneficiary population, would leave the Medicare beneficiary population costlier, on average, to cover.