Raising Eligibility Age for Medicare Would Save $7.6B, Hike Other Costs
Raising Medicareâs eligibility age from 65 to 67 would save the federal government $7.6 billion in 2014 but would increase costs for elderly U.S. residents and employers, according to a new Kaiser Family Foundation report, CQ HealthBeat reports (Bunis, CQ HealthBeat, 3/29).
According to Kaiser Health News, lawmakers have considered raising Medicare's eligibility age as a way to address the federal deficit and extend the program's solvency.
The report assumes that the federal reform law will be implemented as planned by 2014 (Carey, Kaiser Health News, 3/29).
Kaiser researchers noted that previous studies found that increasing the eligibility age by two years would save money but would leave millions more U.S. residents uninsured. However, the researchers said those reports did not factor in the reform law, which would help offset an increase in the uninsurance rate.
The Kaiser report concluded that out-of-pocket costs for 65- and 66-year-olds would increase by $5.6 billion in 2014. According to findings, 75% of these residents would pay an average of $2,400 more for health care in 2014 than they would as Medicare beneficiaries. However, about 25% of those affected would pay less for health coverage because they would be eligible for Medicaid or premium tax credits, the report found.
Meanwhile, those still eligible for Medicare would see premium increases of about 3% because of a higher concentration of older and sicker beneficiaries.
Employer costs would rise by an estimated $4.5 billion in 2014 because employer plans would become the primary provider of health benefits for 65- and 66-year olds, the study found.
Researchers estimated that increasing the eligibility age would produce $31.1 billion in gross savings for the federal government in 2014, which partially would be offset by federal spending increases of $8.9 billion for Medicaid beneficiaries and $7.5 billion for individuals receiving premium tax credits in health insurance exchanges created under the reform law.
According to the study, gross savings also would be offset by a $7 billion reduction in Medicare premium receipts.
The report concluded, "[T]his analysis underscores the importance of carefully assessing the distributional effects of various Medicare reforms and savings proposals to understand the likely impact on beneficiaries and other stakeholders" (CQ HealthBeat, 3/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.