A second look at raising the Medicare eligibility age
The idea of raising the Medicare eligibility age has been cropping up a lot lately, endorsed by politicians as diverse as President Obama and Republican Sen. Tom Coburn (Okla.). Just yesterday, presidential contender Mitt Romney endorsed the idea as part of his Medicare reform package and as a means of reducing the program’s cost.
The policy, long opposed by many Democrats, has gained in popularity in part because of the Affordable Care Act. The thinking is that seniors who aren’t yet eligible could just enroll in the new health insurance exchanges, where they would have premium subsidies and consumer protections. And even though liberals have raised alarms that it would hurt seniors, a new analysis from the Committee for a Responsible Federal Budget suggests that they may want to take a second look. Raising the Medicare eligibility age, the analysis found, could reduce the cost burdens of health care for the lowest-income seniors.
Much of the criticism of changing Medicare’s eligibility age has to do with the way it moves costs around, creating some savings for the federal government but increasing spending for seniors and states. Here’s how the Center for Budget Policies and Priorities broke that down in a widely circulated chart:
The CFRB analysis digs a little bit deeper into the data, to look at which seniors would be on the receiving end of that cost shift. It uses research from the Kaiser Family Foundation, which found that, if the Medicare eligibility age went up to 67, some seniors would actually pay less for their health care because of the more generous benefits available through the health reform law. The seniors who save, it turns out, would be those with the lowest incomes:
“Medicaid and the health insurance exchange are in some cases more generous than Medicare,” the CFRB analysis explains. “Those with no employer coverage making less than 150 percent of the poverty line see on average a $3,000 reduction in costs, those under 200 percent a $2,000 reduction, and even those under 300 percent of poverty ($33,000 for an individual) see a reduction in their out-of-pocket costs.”
This does make the case that some of the more vulnerable seniors could be better off if the Medicare eligibility age were increased. But the CFRB hasn’t addressed other concerns with the policy change. Raising the eligibility age for Medicare would increase premiums both in Medicare and on the exchanges, since Medicare would lose its cheapest, youngest members while the exchanges would gain a few million new subscribers that are older than the rest of the pool.
States still wouldn’t like the policy, as their already budget-crunched Medicaid programs would have to cover medical bills previously paid by Medicare. And there’s also a lingering question about the exchanges: the marketplaces still haven’t come online yet, and won’t until 2014. With some states refusing to set up an exchanges, its unclear what kind of a safety net they’ll provide for lower-income seniors in this scenario.