A recent study by the Kaiser Family Foundation on the effects of raising Medicare's eligibility age to 67 in 2014 shows that while the federal government would achieve $7.5 billion in savings, the move would also result in $10.1 billion in extra costs for 65- and 66-year-olds and employer-sponsored retiree healthcare costs.
The proposal, which has been pushed forward recently by deficit hawks in Washington, shows that the shift would affect roughly 5 million 65- and 66-year-olds and that three-quarters of those affected would pay an average of $2,400 more for healthcare than they would have paid under Medicaid. Further, adding those that were previously covered by Medicare to the insurance pool would result in 3 percent higher premiums for those who get their coverage through the state's health insurance exchanges.
[See also: Kaiser Family Foundation's Five Facts on the Uninsured; Moving Beyond Health Care Reform Repeal to Revision]
"Raising Medicare's age of eligibility would obviously reduce Medicare spending, but would also shift costs onto seniors and employers, and increase costs elsewhere on the federal ledger," said Kaiser Family Foundation vice president Tricia Neuman, who leads the new Kaiser Project on Medicare's Future. "This analysis drives home the tough policy choices that lie ahead when Washington gets serious about reducing the federal deficit."
The study, which assumed full implementation of the Affordable Care Act, found that in the absence of health reform, raising the age of Medicare eligibility would raise the ranks of the uninsured in this country. This is because many older Americans would find individual insurance difficult to afford in the absence of Medicare plans.
Specifically, raising the age to 67 would result in gross savings to the program of $31.1 billion, but a number of offsets would whittle into those savings. Taking the 65- and 66-year-olds out of Medicare would result in many of them receiving healthcare through Medicaid, which would increase federal spending for that program by $8.9 billion. It would cost the federal government another $7.5 billion in insurance premium tax credits for those buying insurance through an exchange and would further be offset by a $7 billion reduction in Medicare premium revenue that would be lost from 65- and 66-year-olds no longer enrolled in the program.
Other findings show that employer costs would increase by $4.5 billion as a result of employer plans becoming the primary payer for those no longer eligible for Medicare. The plan would also shift more than $5.6 billion in out-of-pocket costs to the 65- and 66-year-olds dropped from the program.