I’m sure I’ve mentioned this before, but we now have additional proof that raising the Medicare eligibility age would be a ridiculous program on all levels. It would not only cause needless anxiety and suffering to 65 and 66 year-olds, it would not achieve its alleged goal of saving money. In fact, it would increase costs almost everywhere in the health care system.
This is an intuitive outcome. We know that other countries, which have systems much closer to the single-payer system of Medicare than the rest of the US health system, spend less than half as much on health care as the United States, with better outcomes. So the way to lower costs in the system is to move CLOSER to a single-payer framework, not further away. Raising the eligibility age to 67 would move further away, putting 65 and 66 year-olds into the market. And as Paul Van de Water explains, that has ripple effects through the system:
While this proposal would save the federal government money, it would do so by shifting costs to most of the 65- and 66-year-olds who would lose Medicare coverage, to employers that provide health coverage for their retirees, to Medicare beneficiaries, to younger people who buy insurance through the new health insurance exchanges, and to states.
The principal study of the effects of raising the Medicare eligibility age, by the Kaiser Family Foundation, estimates that its 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 care costs to individuals, employers, and states.
The fundamental purpose of deficit reduction is to strengthen the economy over the long term. The relentless rise in health care costs is the key driver of projected long-term deficits that policymakers must address. But reducing federal health care costs by raising state and private-sector health care costs even more makes little sense, as it only increases the burden that health care costs place on the economy as a whole. The goal should be to slow the growth of health care costs system-wide, while extending coverage to all Americans. This proposal does just the opposite on both fronts — raising costs system-wide and increasing the ranks of the uninsured.
Incidentally, I would question that net federal savings number. If exchange enrollees have to pay some portion of $2.5 billion more in 2014, as per the graph at the top, and the newly excluded 65 and 66 year-olds have to pay $3.7 billion more, that will mean not only more burden on the federal government on programs like Medicaid, but higher federal subsidies to cover the expanded cost of health care for the riskier pool of beneficiaries. It appears Kaiser’s study takes this into account, but given the numbers it doesn’t seem like they’ve fully accounted for it.
And there’s another factor. Putting 65 and 66 year-olds on a less stable health program means that when they turn 67 and enter Medicare, they are sicker on net. That means higher costs for Medicare over time. The purpose of health reform was not to make populations even sicker and more costly to treat.
The authors found that, relative to those with insurance before age 65, those without insurance prior to Medicare eligibility spent much more money on health care after they became Medicare eligible. In other words, people wait to get care until their Medicare kicks in. This is bad both for health and for the federal government’s bottom line.
Delaying Medicare even longer would likely make this worse. People would forego care longer, health would suffer, and Medicare would pay for the consequences later.
Aaron Carroll has more here. Raising the eligibility age is such a miserable idea, even conservatives like Reihan Salam oppose it.
The President will be offering a large deficit reduction package to go with his jobs speech in September. Early indications are that the deficit package will be similar to the grand bargain he almost inked with John Boehner in July, and that could include raising the Medicare eligibility age. I hope I’ve made clear how pig-ignorant that would be.