The Congressional Budget Office (CBO) released a new report on lowering the age for Medicare eligibility to age 60. The report Budgetary Effects of a Policy That Would Lower the Age of Eligibility for Medicare to 60 found Medicare rolls would rise by nearly 14 million people. It would also increase the budget deficit by $155 billion over a 5-year period.
Something not mentioned in the CBO report is how 13 million newly eligible Medicare beneficiaries are going to find primary care physicians willing to treat them. As it currently stands, only 72% of primary care physician practices are accepting new Medicare patients. People approaching Medicare age are often advised to start looking for a physician a year in advance of becoming eligible for Medicare. Medicare patients are among the least preferred patients in primary care physicians’ practices. Medicare pays less than private coverage and seniors often have multiple problems that extend their office visits from 10 to 15 minutes to 30 minutes or more without a proportional increases in reimbursement.
Below is a detailed analysis of both the economic and coverage implications of this policy by Darren Webb of the Health Market and Policy Network.
Economic Impacts of Lowering the Medicare Eligibility Age to 60
- Increase spending by $221.8 billion over 5 years
- $154.9 billion would be in new, deficit spending
- $66.9 billion would be offset through savings in other areas of the Federal Budget
- $54 billion in revenue from increased wages previously not exposed to the employment-based coverage tax exclusion
- $14 billion in decreased premium tax credits through the ACA
- Overall spending on Medicare would expand by $449 billion over 5 years.
- $146 billion in increases for Part A
- NOTE: This policy is assumed to be implemented the same year as the Medicare Part A trust fund is projected to become insolvent. It also increases Medicare Part A deficits from $335 billion in 2030 to including an ADDITIONAL $146 billion by 2031. This change will also likely exacerbate an estimated cut in provider reimbursement of 9 percent.
- $240 billion in increases for Part B
- $63 billion in increases for Part D
- $371.4 billion of new Medicare spending would be in new, deficit spending
- $78 billion of the $449 billion is offset within the Medicare Program
- $61 billion in Medicare Part B premium receipts
- $13 billion in Medicare Part D premium receipts and state “clawbacks”
- $3 billion increased disproportionate share hospital (DSH) payments
- NOTE: CBO also estimates Part B and D premiums would decrease because the new enrollees would have lower average spending as they would be younger and theoretically healthier.
- $111.8 billion of savings to the Medicaid program
- This would be offset by $18 billion in spending on Medicare premiums and cost sharing
- The result is $94 billion in aggregate savings
- $53.5 billion in new revenue from employment-based coverage through shifts from tax-exempt health insurance to taxable wages
- $25 billion due to an estimated 0.8 percent decrease in premiums
- $12 billion due to decreased health benefits from former employees to increased wages for current employees
- $8 billion due to employers who stop offering employment-based coverage as a result of this policy
- $8 billion in increased taxable revenue due to individuals who become eligible for Medicare as a result of this policy
- $99 billion in savings from the ACA marketplace premium subsidies
- $95.5 billion in fully realized savings
- $82 billion for decreases in ACA subsidies
- $13 billion in increased revenue
- $5 billion in new subsidies because of a projected increase in premiums of 2.2 percent
- $8.7 billion in additional spending through the Department of Defense Medicare-Eligible Retiree Health Care Fund (MERHCF)
- $17.6 billion in additional Social Security spending because some individuals will retire early and collect Social Security benefits earlier than they would otherwise.
- NOTE: This may also impact the depletion of the Social Security trust fund
Coverage Impacts of Lowering the Medicare Eligibility Age to 60
- 13.6 million of 18.2 million newly-eligible would enroll in some aspect of Medicare
- 7.3 million would enroll in Medicare Parts A and B as their primary source of coverage
- 900,000 would enroll in Medicare Parts A and B as their secondary source of coverage
- 4.8 million would enroll in Part A only and keep their current coverage
- 500,000 would enroll in Part A only, which CBO also counts as uninsured
- 8.2 million Americans with employment-based coverage would be newly-eligible for Medicare
- 1.9 million Americans would enroll in Medicare Parts A and B with employment-based coverage, including:
- 150,000 due to early retirement
- 170,000 after losing the option of employment-based coverage
- 330,000 would decline employment-based coverage in favor of Medicare
- 1.3 million would keep employment-based coverage and enroll in Medicare
- Most of the rest would enroll in Medicare Part A because it lacks a premium for most beneficiaries
- 2.3 million Medicaid enrollees would become eligible for Medicare
- 1.7 million would enroll in Medicare Parts A and B
- 400,000 would remain on Medicaid only
- 100,000 would enroll in Medicare Part A and Medicaid only
- 100,000 would only enroll in Medicare Part A and be considered uninsured
- 1.9 would seek coverage through Medicare Parts A and B
- 100,000 would be insured only through Medicare Part A and be considered uninsured
- 950,000 of the 1.3 million uninsured Americans who would by newly eligible for Medicare would enroll in Medicare Parts A and B
- Roughly 80 percent of these are currently ineligible for Medicaid or ACA premium subsidies and would pay substantially less than on the unsubsidized market
- Most of the approximately 350,000 remaining would likely enroll in Medicare Part A because it lacks premiums, but likely would be considered uninsured
- CBO claims overall 400,000 Americans would newly gain insurance coverage overall, even though others are projected to become uninsured as merely Medicare Part A beneficiaries