Raising Medicare eligibility age to 67, there are many unintended consequences

Some policymakers and politicians support the idea of raising the Medicare eligibility age to 67 as a relatively harmless way of lowering federal spending.

Simply raising the age for Medicare eligibility sounds easy and since it is all in the future, what’s the big deal? After all, eligibility for Social Security was raised several years ago. The fact is those two additional years may save the government billions of dollars. However, they are not dollars saved, they are dollars shifted to individuals, employers and the states.

Here are some of the consequences to consider:

1. Individuals will work longer to retain employer coverage thereby raising employer costs, all employee participant costs, and change employment dynamics as the workforce ages and the influx of younger workers slows. The upside may be longer years of employment increase saving for retirement.
2. Workers who do retire before age 67 and who retain employer health insurance (mostly state governments and relatively few large employers) will drive health insurance costs up for those employers and all other plan participants.
3. Workers who do not enjoy retiree health benefit coverage will be forced into the new health insurance exchanges upon retirement before age 67. This will raise their own costs and will increase government expenses because many of these people will be eligible for subsidies under PPACA.  In addition, because the premiums for plans offered in the exchanges will reflect the health care spending of enrollees and older people have higher expenses, the premiums will be higher for all participants in the exchange plans

There is no free lunch here, everything is connected, especially when it comes to health care.  The government does not buy health care in a vacuum, what it does not pay for someone else will until we learn to do with less or become substantially more efficient.

Related articles

• Politico: Obama and Boehner had agreed to raise Medicare eligibility age (dailykos.com)
• Raising The Medicare Eligibility Age (theatlantic.com)
• Medicare at 67: The next big change? (politico.com)