In what may be one of the most under-reported stories of the debt ceiling talks, Politico’s Jen Haberkorn notes that before negotiations broke down on Friday evening, President Obama and Speaker of the House John Boehner tentatively agreed to gradually raise the Medicare eligibility age as part of a “grand bargain” to increase the nation’s borrowing limit:
Details of the plan were not yet finalized before the Obama-Boehner talks collapsed on Friday. But in general, the agreement called for very gradually increasing the eligibility age from 65 to 67 over about two decades, according to administration and Republican congressional sources.
One pathway would call for increasing the age by one month per year beginning in 2017 until it reached 66 in 2029. In 2030, it would increase two months per year until it hit 67.
The administration’s willingness to entertain the idea may have given “a controversial idea more legitimacy and high-profile support than it’s ever gotten before,” Haberkorn observes, and it is likely to rile progressives who question the wisdom of the compromise.
Jacob Hacker, political science professor at Yale University, has called the scheme “the single worst idea for Medicare reform” since it “saves Medicare money only by shifting the cost burden onto older Americans caught between the old eligibility age and the new, as well as onto the employers and states that help fund their benefits.” Worse still, some seniors between the ages of 65 and 67 could “end up uninsured,” the Center on Budget And Policy Priorities’ Edwin Park predicted. Individuals “with incomes too high for premium subsidies in the exchange and those who qualify for only modest subsidies” could be priced out of affordable coverage, he warned.
According to the Kaiser Family Foundation, raising the eligibility age to 67 would cause an estimated net increase of $5.6 billion in out-of-pocket health insurance costs for beneficiaries who would have been otherwise covered by Medicare. Seniors in Medicare Part B would also face a 3 percent premium increase, the study found, since younger and healthier enrollees would be routed out of Medicare and into private insurance. Beneficiaries in health care reform’s exchanges would see a similar spike in premiums with the addition of the older population.
Federal cost savings, meanwhile, would be slim. The Congressional Budget Office studied the proposal when it was part of the House GOP’s budget plan and found it “would have little effect on the trajectory of Medicare’s long-term spending…because younger beneficiaries are healthier and thus less costly than the program’s average beneficiary.”