The Consequences Of Raising The Medicare Eligibility Age

Jonathan Cohn continues his “5 Scary Things About The Republican House Budget You Haven’t Heard” with this piece examining the consequences of raising the Medicare eligibilty age from 65 to 67. Cohn argues that so-called younger seniors will have to maintain their employer-sponsored coverage longer, increasing the costs for the employer and raising premiums:

The change would happen gradually, with the eligibility age rising two months every year, starting in 2022. And, in the grand scheme of things, it’s not like that many people are between the ages of 65 and 67 anyway. But think for a second about who those people are–and the insurance options they’d have available to them without Medicare.

Remember, the House Republican budget would also repeal the Affordable Care Act. That would leave insurance companies free to charge higher premiums, restrict benefits, or deny coverage altogether to individual applicants who have pre-existing conditions. Given the relatively high incidence of conditions like hypertension, arthritis, and vision problems among older Americans, it’s safe to assume many seniors would have trouble finding affordable coverage–if, indeed, they could find coverage at all.

To be sure, pre-existing conditions wouldn’t affect older Americans who could get coverage from large employers, either as current workers or younger retirees. That’s how most “younger seniors” get insurance now. But the addition of so many 65- and 66-year-olds to employer insurance plans would raise benefits costs for businesses and, eventually, their workers.

But nine percent of of seniors between 65 and 66 years of age will find themselves uninsured — they will have a hard time finding coverage in a market which tries to maximize profit by insuring only the healthiest Americans — while another 11 percent would be underinsured, a 2009 study found. This, it’s worth pointing out, would also increase the costs for the Medicare program because the newly eligible population would be entering the program with more chronic conditions and would need to use more care. In fact, a recent study found that “chronically ill people turning age 65 who were previously uninsured had lower spending than insured people prior to Medicare. Yet once on Medicare, these uninsured Americans spent 50 percent more than previously insured Medicare beneficiaries who also had chronic disease.” It’s higher costs all around.