Reports surfaced last week that in his effort to reach a “grand bargain” with Congressional Republicans to raise the debt ceiling, President Obama refused to take cuts to Medicare off the table and said he would consider a proposal to raise the program’s eligibility age from 65 to 67, a plan floated by Sens. Joe Lieberman (I-CT) and Tom Coburn (R-OK). At the White House press briefing this afternoon, Press Secretary Jay Carney confirmed that raising Medicare’s eligibility age was under consideration:
REPORTER: In the spirit of rebutting this idea that it has all been smoke and mirrors, is the President willing to raise the retirement age for Medicare and Social Security? [...]
CARNEY: A lot of the reporting about what has been under consideration has been accurate. And I would simply say for those of you, all of you, who are familiar with these issues what hard choices are to judge for yourselves whether the kinds of things that we have been able to consider do not constitute significant, significant, demonstrations of a willingness to compromise and I think the answer is they absolutely do.
For Americans to judge the level of compromise constituted by raising the Medicare eligibility age, they need to know exactly what that proposal would mean for the program. Jacob Hacker, Professor of Political Science at Yale University, called the scheme “the single worst idea for Medicare reform — which is saying a lot in light of the disastrous Paul Ryan plan for turning Medicare into an inadequate voucher for private insurance.” “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 (and, after 2014, back onto the federal government through subsidized coverage for the uninsured under the 2010 health care reforms).”
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. Employer retiree health costs would also increase by $4.5 billion. “Costs are shifted to older people who have been paying into the Medicare program their entire lives,” the Urban Institute’s Judy Feder said.
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.
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.”
“Private coverage costs more than Medicare for the same benefits and is much less reliable,” Hacker said. “So this is an accounting maneuver that does nothing to address the real challenges of runaway health care costs and insecure coverage.”