Cost shift seen in raising Medicare age to 67

[March 29, 2011]  WASHINGTON (AP) -- Employers and even some younger people would pay more for health insurance if lawmakers raise the eligibility age for Medicare, a study to be released Tuesday concludes.

The findings suggest that the emerging debate over Medicare's future matters not only to seniors and those nearing retirement, but to a broad cross section of Americans.

The report from the nonpartisan Kaiser Family Foundation shows that federal taxpayers would save billions if the Medicare eligibility age, currently 65, is increased by two years. But people ages 65-66, employers, states, Medicare recipients and even some younger families would see ripple effects that add to their costs.

Those costs could total more than $2,000 a year for some individuals.

Medicare covers 47 million elderly and disabled people, and it's is widely seen as financially unsustainable over the long run. Raising the eligibility age is among the leading fixes under discussion.

Years ago, lawmakers decided to gradually increase the Social Security retirement age to 67 for people born in 1960 or later. But they left the Medicare eligibility age unchanged. Now some policymakers are saying the qualifying ages for the two programs should be yoked together -- at 67 or even higher.

"There are so many moving parts in a program as big as Medicare that it's difficult to make changes without having ripple effects for others," said Tricia Neuman, Kaiser's leading Medicare expert. The foundation serves as a clearinghouse for information about the nation's health care system.

The study assumed that President Barack Obama's health care overhaul remains in place, and doesn't get overturned by the courts or repealed by Congress. Without Obama's health insurance expansion, raising the Medicare age could potentially leave several million more people uninsured. With the new health care law, the main consequence appears to be a big shift in costs from the federal government to others.

Among the report's findings:

• Most 65- and 66-year-olds would pay significantly more for their health care because they would not be in Medicare. If the Medicare age was raised to 67 in 2014, about three out of four people ages 65 to 66 would pay $2,400 more, on average. The rest would be eligible for various kinds of subsidies provided for low-to-moderate income people by the health care law.

• Employers would pay an estimated $4.5 billion more for health insurance in 2014, because older workers would stay on the job longer to remain eligible for their company's coverage. Under the rules, workplace plans must provide primary coverage for employees who keep working past 65.

• People under 30 buying coverage in new health insurance markets that open for business in 2014 would see their premiums rise nearly 8 percent over previous projections. The health care law sets up insurance markets to provide one-stop shopping for people who buy their coverage directly and for small businesses. An influx of older adults no longer eligible for Medicare would raise costs for that pool.

• Medicare recipients would face monthly premiums about 3 percent higher because the youngest seniors would be removed from the program's insurance pool, raising per-person costs for those who remain behind.

• States would face somewhat higher costs because some low-income people currently eligible for Medicare and Medicaid would be left with Medicaid only.

"This analysis drives home the tough policy choices that lie ahead when Washington gets serious about reducing the federal deficit," Neuman said.

[Associated Press; By RICARDO ALONSO-ZALDIVAR]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.