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Raising Medicare’s age: Saves feds $5.7 billion, costs you $11.4 billion

House Speaker John Boehner has made his counter-offer on deficit reduction and, as my colleague Lori Montgomery reports, it floats the idea of raising the Medicare eligibility age from 65 to 67.

This isn't a new idea: It's come up in a lot of deficit reduction proposals of years past, as economists and legislators stare down a Medicare program eating up a growing chunk of the federal budget.

The idea has, however, gained a bit more traction since the Affordable Care Act passed. If the Medicare age were raised, the thinking has gone, the 3.3 million 65- and 66-year-olds  would still be guaranteed access to health coverage through the tax subsidies. The lowest-income seniors -- those earning less than 133 percent of the federal poverty line - would qualify for Medicaid.

That's the upside. Health care economists see a number of downsides, too. For one thing, Medicare tends to be a pretty efficient program. Its costs have grown slower than private health insurance plans. The Center for Budget Priorities and Policy estimates that, while the federal government would save $5.7 billion, the rest of the health care system would end up spending $11.4 billion more to provide those same benefits.

That $2.5 billion in orange on the chart above comes from increasing the premiums that a lot of other people pay for their health insurance coverage. The Kaiser Family Foundation estimates that moving these seniors into the health insurance exchanges would increase premiums there by 3 percent, as the larger insurance pool absorbs a patient population that tends to be older and sicker than its younger counterparts.

Medicare premiums likely would go up too. These seniors would be the more expensive enrollees on the exchange. But when it comes to Medicare, they're the least expensive patients, the younger population with fewer health care needs than, say, the 90-year-old cohort.

There's also concern that these seniors might not even have an option should the eligibility age get raised as some states do not plan to expand their Medicaid programs. That could leave any senior who earns less than 133 percent of the federal poverty line -- about $15,000 for an individual -- without any coverage option at all.

There are certainly savings to be had in raising the Medicare eligibility age. They do, however, come at a cost to the other sectors that pay for health care, ultimately increasing overall medical spending.