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Thursday, February 9, 2017

Raising Medicare’s Eligibility Age: With and Without the ACA

Peter S. Arno, Senior Fellow, National Academy of Social Insurance

The National Committee to Preserve Social Security and Medicare Foundation released a new study showing the dramatic impact of raising Medicare’s eligibility age from 65 to 67—assessing results on the rates of seniors who will be uninsured if the ACA stays in place and if it is repealed. The study was guided by the Foundation’s Task Force on America’s Health and Retirement Security, chaired by Marilyn Moon and led by Principal Investigators, Peter Arno and Carroll Estes.

The study is based on an analysis conducted by the Actuarial Research Corporation that uses the year 2019, half-way through the Trump administration, to provide a snapshot illustrating the impact of raising Medicare’s eligibility age, which is featured in Speaker of the House Paul Ryan’s plan, “A Better Way: Health Care.” If Medicare eligibility is raised from the current 65 years of age to 67, people aged 65 or 66 will face three alternatives: private or employer-based health insurance (for the most fortunate in that age group), public health insurance (mainly through Medicaid), or becoming uninsured. Our study shows the impact for ages 65-66 by gender and race, with all demographic groups showing major increases in the number and percentage uninsured.

The results could be devastating for up to 3.8 million seniors. Currently, Medicare covers almost everyone 65 and over, with only 1.1 percent of people over 65 uninsured. But if the eligibility age for Medicare increases to 67 even if the ACA is not repealed, the percentage of uninsured would increase seventeen-fold to 18.7 percent—or 1.9 million seniors aged 65 and 66. If the ACA is repealed, the percentage of uninsured would increase to 37 percent or 3.8 million people, more than one-third of all seniors aged 65 and 66.

Older Americans without health insurance will be hard-pressed to get needed care, particularly if the ACA is repealed. To the extent they have chronic conditions, insurers may no longer agree to cover them and, even if coverage is available, it is unlikely to be affordable for most people; if it is affordable, it is likely to cover only limited benefits, with annual and lifetime caps. They will, therefore, end up using emergency services at far greater cost to our health care system and the institutions that provide them care.

Doctors and hospitals in particular will find themselves covering the cost of care for most of these newly uninsured Americans (without reimbursement), putting these health care providers at financial risk. To the extent they raise their rates to absorb these costs, insurance premiums will rise further, escalating health care costs for insured Americans.

Medicare is far better than commercial insurance at guaranteeing coverage, containing costs, and giving people with costly conditions access to the care they need. We should be expanding Medicare to everyone in the U.S., not driving up health care costs and the number of uninsured by raising the Medicare eligibility age.

Posted on February 9, 2017  |  Add your comment
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Another phenomenon that will occur if the eligibility age is increased is that because 65 and 66 year olds cost less than those 67 and over, the Part B premium will need to be raised to account for the loss of the "healthier" beneficiaries. My estimate is that it would be about 3.5%. Not an outrageous increase but still an increase that will hit all beneficiaries.
This is an excellent point--there is no question that if the pool of Medicare beneficiaries becomes older and sicker that they will require more costly care. Any data that you can point to regarding this would be very helpful.

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