Raising the Age of Medicare Eligibility
|March 31 2011|
Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform
Several major deficit-reduction and entitlement reform proposals include raising Medicare's age of eligibility from 65 to 67 as a way of improving Medicare's solvency. This Kaiser Family Foundation report estimates the expected effects on such a change on the federal budget, as well as on affected seniors' out-of-pocket costs, employers, Medicaid and others in light of the major changes in coverage enacted under the 2010 health reform law.
The study estimates that raising Medicareís eligibility to 67 in 2014 would generate an estimated $7.6 billion in net savings to the federal government, but also result in an estimated net increase of $5.6 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree health-care costs.
In addition, the study projects that the change would raise premiums by about 3 percent both for those who remain on Medicare and for those who obtain coverage through health reform's new insurance exchanges. The study assumes both full implementation of the health reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal.
The study is authored by researchers from the Kaiser Family Foundation and the Actuarial Research Corporation and is available online. It is the first in a new series of Kaiser Family Foundation studies examining the effects of proposed Medicare changes on the programís beneficiaries, the federal budget and other stakeholders.
PDF format, 1.49MB, 32Pages.
Our analysis differs from prior analyses of raising the age of Medicare eligibility primarily because it takes into account key provisions in the 2010 health reform law, which provides new avenues to public and private health insurance coverage for those under age 65, including expanded Medicaid eligibility and a new health insurance Exchange.
This study examines the expected key effects of raising the age of Medicare eligibility to age 67. We assume full implementation in 2014, rather than the more common assumption of a gradual increase, to illustrate the likely effects once fully phased in. We also assume full implementation of the 2010 health reform law. A full discussion of assumptions and their expected effects is included in the Technical Appendix. Key findings include:
In addition, costs to employers are projected to increase by $4.5 billion in 2014 and costs to states are expected to increase by $0.7 billion. In the aggregate, raising the age of eligibility to 67 in 2014 is projected to result in an estimated net increase of $5.6 billion in out-of-pocket costs for people who would otherwise have been covered by Medicare. This analysis underscores the importance of carefully assessing the distributional effects of various Medicare savings proposals to understand the likely impact on beneficiaries and other stakeholders.
|Last Updated ( March 31 2011 )|
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