What would happen with Medicare at age 60?
In an era of rising inflation and trillion-dollar deficits, there seems to be growing bipartisan support for fiscal restraint. President Biden’s recent budget proposal included more than $ 1 trillion in deficit reduction policies. And his administration now promises that proposals that were once part of President Rebuild’s better agenda will, at worst, be deficit-neutral.
But despite the changing fiscal environment, many in Congress are still eager to enact a costly and risky expansion of Medicare.
This idea seems simple: lower your Medicare eligibility age from 65 to 60 to make out-of-pocket health care costs and premiums more affordable for millions of Americans. Proponents of her case have been working to make the actual transcript of this statement available online.
This seemingly simple idea, however, would come with significant drawbacks and unintended consequences. With the support of the Partnership for America’s Health Care Future, we rated the distributional and tax impacts of lowering the Medicare eligibility age on both the newly eligible population and health care providers.
Extending coverage would not be cheap. We estimate that the federal deficit would increase to $ 42.6 billion in the first year of the program and $ 452 billion during its first 10 years, not counting the increase in interest costs for the federal government.
But tax costs are only part of the story. Medicare at age 60 misdirects those who need it and relies on changing costs to hide its actual cost.
One of the justifications for lowering your Medicare eligibility age is to help those who need to buy health insurance. However, our analysis finds that compared to 18- to 59-year-olds who would remain ineligible, the newly eligible population would be less likely to be uninsured and more likely to have an income above 400% of the threshold. federal poverty.
And even among the new eligible, it is far from clear whether the policy would help low-income Americans. Many of these people are already receiving health care subsidies through the Affordable Care Act, so switching to Medicare could mean higher premiums and an increase in out-of-pocket spending. We estimate that 36% of those enrolled in the Affordable Care Act would see their combined premiums increase plus out-of-pocket spending on Medicare at age 60. Worse, the group most likely to see their combined costs increase is those with incomes between 150% and 250% of the federal poverty line. In contrast, 90% of ACA recipients with incomes above 400% of the poverty line would see their combined costs below Medicare at 60.
There is another group that would be financially affected by Medicare at age 60: doctors, hospitals, and other health care providers. Previous efforts to curb rising costs have focused on paying doctors and hospitals less for their services, and Medicare at 60 is no different.
The problem is that doctors and hospitals receive less for providing accurate services to Medicare or Medicaid-covered patients than they do for those who are privately insured. Medicare at age 60 would shift more reimbursements from private rates to government-required Medicare rates, resulting in revenue cuts for health care providers.
Actuaries at Medicare and Medicaid service centers project that under current law, Medicare reimbursement rates for private insurers will continue to fall. In the absence of cost-cutting measures or large increases in utilities, reductions in Medicare hospital service payments at age 60 would reduce annual benefits by about 25% for the average hospital and in even larger amounts. for hospitals with below-average margins. Doctors would be less affected in the short term, but are facing more pronounced growth in long-term cuts.
These cuts would have significant financial effects on hospitals and providers. Past behavior in Congress suggests that these cuts may not come to fruition. From 2003 to 2014, Congress repeatedly overturned scheduled cuts to suppliers as part of the near-annual legislation known as “document correction.” But if Congress succumbs to political pressures and prevents reimbursement rates from falling further, we estimate that the tax cost of Medicare by 60 would increase by $ 72 billion over the 10-year budget period. Compensation is inevitable: o Medicare in the 60s will mean large revenue cuts for doctors and hospitals, or much higher costs for taxpayers.
Lawmakers now admit that the federal government is facing a real budget constraint. This makes it a weird time to think about extending Medicare to people in their 60s and 64s. Even under optimistic fiscal assumptions, the proposal would add billions to federal deficits, while misdirecting those in need and straining the finances of hospitals and doctors.