The special congressional committee is looking for ways to reduce the deficit. That really means taking more of your money and giving you less for it, but that’s ok if it is in our long-term best interest … it is, right?
One idea that keeps surfacing is raising the Medicare eligibility age to 67 or some other number above 65. That is supposed to save money, a good thing I guess. But remember, saved money has to come from someplace. In this case it will come from individuals, employers and guess what, it will still come from the federal government as well.
That is because many, if not most, of the new young elderly will be getting their health care through the government subsidized exchanges and depending on their income will receive a substantial subsidy toward the premiums. Is that what we call taketh with one hand and giveth with the other?
Let’s assume you are 66 with an income (perhaps Social Security) equal to 133% of the poverty level, that’s about $14,483 for a single person in 2011. Your cost for health insurance is capped at 3% of income so your premium above $434 a year is paid for by the government. What do you think the premium will be for a 66-year-old? Well today the full cost of Medicare Part B alone is about $400 per month; add to that hospital and drug coverage and you get a total cost in excess of $10,000 a year of which in this example, $9,566 will be paid for by the government. Of course smaller subsidies apply on incomes up to 400% of the poverty level, but you get the idea, costs go from Medicare to PPACA, while the risk goes to the insurers and all their policyholders.
Now you know where the savings come from.
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