Raise Medicare Eligibility Age?

By | January 13, 2013

One of the cost savings ideas is to gradually raise the eligibility age for recipients of Medicare. This will indeed create savings for medicare, but shift the costs to individuals and employers. This article  from Bloomberg.com explains how it works and presents alternative cost savings.


One tempting idea for saving money on Medicare, a program that vacuums up some 15 percent of federal spending, is to raise the age at which Americans become eligible for it. We ourselves have succumbed to this temptation, on more than one occasion.

Raising the eligibility age a couple of years, to 67, remains an attractive idea; it would save the program a lot of money. It’s just that there are a lot of other things Washington should try first.

Before we get to those, allow us to explain our newfound hesitation: Raising the eligibility age is neither as simple nor as effective as many of its proponents claim. Just raise the age gradually, they say, and save as much as $113 billion over 10 years. As an added benefit, you would encourage some Americans to retire a bit later. After all, the average 65-year-old today can expect to live a few years longer than someone the same age could expect in 1965 when the Medicare age was set.

The problem is that such a change would do little to control overall health-care costs, which should be the ultimate goal of all health-care reform. If 65- and 66-year-olds can no longer receive Medicare, they would have to find other health insurance. Some would remain on their employer plans. Some would fall back on Medicaid. Some would join the people shopping for insurance on the state exchanges, perhaps qualifying for federal subsidies.

If the eligibility age were raised by two months a year beginning in 2014, according to theCongressional Budget Office, Medicare would save $148 billion from 2012 to 2021. However, increased federal spending on things such as Medicaid and insurance subsidies would reduce overall federal savings to $113 billion.

The article goes on and suggests alternative ways to save money. The final suggestion is to move away from a fee for service plan and move to a total care plan.