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Should the Medicare Eligibility Age Go Up?

Monday, September 19th, 2011

Some politicians are talking about raising the Medicare eligibility age to 67 to lower cost and keep the program going. They point to reports saying the Medicare hospital insurance fund could be depleted as early as 2024. According to  the Kaiser Family Foundation, raising the eligibility age to 67 would reduce federal spending, on net, by $5.7 billion in 2014.

Medicare has had a huge impact on the lives of Americans, relieving families of financial stress as loved ones grow older. Since mesothelioma usually is diagnosed in older patients, Medicare is a critical concern for mesothelioma patients and their families. But is raising the eligibility age really the way to go?

The American Hospital Association argues that raising the eligibility age is better than cutting the amount of money Medicare pays to health care providers, which will happen under current law. The AHA points to provisions in the Patient Protection Act (popularly know as “Obamacare”) that will pay a subsidy to companies that provide insurance for their retirees. The PPA also will make it easier to purchase private insurance policies. The 65 and 66 year olds will not be left without health care, they say.

However, fewer than a third of retirees get medical benefits from their former employers, and the private policies will probably cost more than Medicare does. Hospitals may find that raising the eligibility age will result in more unpaid hospital bills.

Critics of the idea point out that what’s really hurting Medicare is out-of-control health care costs, and raising the eligibility age doesn’t address that. In fact, it might drive health care costs higher, if uninsured seniors put off getting preventive care and get sick as a result.

The Kaiser Family Foundation study linked above says that if eligibility were raised to 67,  costs to employers could increase by $4.5 billion in 2014, and costs to states could increase dramatically as more seniors turn to Medicaid or state programs. And seniors would pay more for their care. So the money saved by the federal government will just be shifted elsewhere.

In fact, the  Kaiser report concludes that the $5.7 billion in net federal savings to the federal government would result in $11.4 billion in higher health care costs to individuals, employers, and states.

The $4.5 billion additional cost dumped on employers is an especially big concern. This is money employers might need to create new jobs, after all. The additional burden on business would also be an additional burden on the economy.

The Joint Select Committee chosen to find ways to cut the budget deficit is expected to consider this proposal and may recommend raising the Medicare eligibility age. But doing so might prove to be a classic example of “penny wise, pound foolish.”