Change sounds good, but the unforeseen consequences are many.
Over the past couple of years I’ve met many people who, as my mother would suggest, were wishing their life away. But I quickly understood why.
These were folks in their early 60s—and even some in their 50s—who couldn’t wait until they turned 65. They were literally counting the days until they could enroll in Medicare.
Many of these folks had been uninsured for years because of pre-existing conditions. They’d been blackballed by insurance companies andcouldn’t buy a policy at any price because they’d been sick in the past. Others were underinsured because they simply couldn’t afford decent coverage. Policies that would better meet their needs were being sold to younger people for $300 a month or less. But for them: at least $1,500.
And even the people with coverage were sick and tired of fighting to get medical bills paid and doctor-ordered treatments approved.
I’m betting every member of Congress has heard these same stories. How, then, could any of them even give the idea of raising the Medicare eligibility age a moment’s thought?
Not only would such a thing be cruel, it doesn’t make sense from an economic point of view. If lawmakers take the time to consider the facts, this idea will quickly fall off the table during the fiscal cliff discussions.
On the surface it might seem a no-brainer. Raising the eligibility age from 65 to 67 would save Medicare billions because there would be fewer medical bills to pay. But those people will still need coverage and will still get sick. So raising the eligibility age would do nothing more than shift the cost of both health insurance and medical care, in many cases to those who can least afford it.
Proponents of this idea say its time has come because starting in 2014, insurers will no longer be able to deny coverage to anyone because of age or health status, thanks to the Affordable Care Act. People who can’t get coverage through the workplace will by then be able to shop for it on the state exchanges. But insurers will still be able to charge older people three times as much as younger folks. That would pose afinancial hardship for many seniors. The Kaiser Family Foundation estimates that two-thirds of 65 and 66–year-olds would have to pay at least $2,200 a year more for coverage than they would if they were on Medicare.
And some of the money that the Medicare program might save would actually cost other parts of the federal government more. People earning up to 400 percent of the federal poverty level will be eligible for subsidies from the government under the ACA to help them afford coverage. If the Medicare eligibility age is increased, more federal subsidy money will be needed to help 65 and 66-year-olds buy policies. And that money will go straight to insurance companies, meaning that about the only people benefiting from this idea would be insurance company executives and shareholders.
Even with the subsidies, some seniors undoubtedly would forgo coverage and pay a penalty to the IRS as required by the ACA because of the hit their family budgets would take from buying insurance. Nearly 15 percent of people between 55 and 65 are currently uninsured, according to the Census Bureau. Many of 65 and 66-year-olds who otherwise would be on Medicare undoubtedly would remain uninsured if the eligibility age was raised.
But those folks would still get sick and need hospital care. Many of them wouldn’t be able to pay for that care, meaning the hospitals would have to pass along the cost of their care to people with private insurance. Those of us with private insurance already pay $1,000 a year more than we otherwise would because of this cost shifting.
Raising the eligibility age would also cost businesses more because they would have to continue providing coverage for employees who would not retire at 65 because they would not yet be eligible for Medicare. Some small businesses would stop offering coverage entirely because of the additional costs.
Every one of us would pay more in yet another way. Putting those 65 and 66-year-olds back in the private insurance pool would mean that everybody else in the pool would pay more for coverage. That’s because those older people would be more likely to need care than the rest of us. All of our premiums would go up.
President Obama said last year he would consider raising the eligibility age as part of a deal to cut federal spending. He’s been silent on the issue so far this year, maybe because he’s given it more thought. Let’s hope so.
Wendell is a Senior Analyst at The Center for Public Integrity where this first appeared on 12/17/2012.