How Would Raising the Eligibility Age For Medicare Affect Medicare’s Financing and You?

How Would Raising the Eligibility Age For Medicare Affect Medicare’s Financing and You?

By Mary Johnson, editor

Raising the age at which people become eligible for Medicare has been proposed as a way of reducing future government spending on Medicare.  The most widely - discussed option would gradually increase the Medicare eligibility age from 65 to 67.  Proponents say the change would generate billions in net savings to the federal government, and that, since people now have coverage through the Affordable Care Act, no one would lose access to health insurance.  Private insurers are required to provide coverage for adults younger than Medicare age without exclusions, everyone is required to have health insurance, and income-related subsidies are available to help reduce premiums if people don’t have an offer of health insurance coverage through an employer.

That said, today’s Affordable Care Act - compliant insurance plans have not necessarily provided affordable coverage — especially for people under Medicare age, 55- 64.  Even with subsidies, people age 55 to 64 pay the highest premiums, which can run into hundreds of dollars per person, per month.  In my area, for example, the second-lowest - costing “silver” plan from Anthem Blue Cross Blue Shield cost $716 per month in 2016, and has a $2,600 deductible.  With a deductible that high, most consumers rarely satisfy the deductible.  To control costs, plans have also imposed narrow provider networks.   In short, older Americans who are over 55 but too young for Medicare currently pay the highest insurance costs in the nation.

In addition, in 19 states across the United States, qualifying for Medicaid can’t be counted on, even with low income.  One of the major provisions of the Affordable Care Act was the expansion of Medicaid eligibility to nearly all low-income individuals with incomes at or below 138% of the federal poverty limit.  While the expansion was intended to be national, a June 2012 Supreme Court ruling made it optional for the states.  In 2016 an estimated 17% of older low-income Americans age 55-64 don’t qualify for Medicaid because their state never expanded coverage.

Worst of all, raising the eligibility age for Medicare would not only cause higher costs for people age 65 and 66, but would cause Medicare premiums to go up for everybody.  That’s because at ages 65 and 66 beneficiaries tend to be in better health and therefore less expensive to insure on average than older Medicare beneficiaries.  Losing this age group would still leave Medicare with the older and sicker Americans, driving up Medicare premium costs.  In addition, people age 65 and 66 are more likely to work and have insurance through their employers.  That group tends to wait to enroll in Parts B and D when they stop working.

What do you think about the proposal to raise the Medicare eligibility age?  We want to know.  Watch for the 2017 Senior Survey in the January 2017 issue of this newsletter or visit check back on our website in January.

Sources:  “Raising the Age of Eligibility for Medicare to 67: an Updated Estimate of the Budgetary Effects,” Congressional Budget Office, October 2013.  “The Coverage Gap: Uninsured Poor Adults in States that Do Not expand Medicaid — an Update,” The Kaiser Family Foundation, January 2016.