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Medicare Could Save $7.6B by Raising Eligibility Age to 67

John Commins, for HealthLeaders Media, March 29, 2011

Raising the Medicare eligibility age from 65 to 67 in 2014 would generate about $7.6 billion in net savings to the federal government, but it would add $5.6 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree healthcare costs, according to a Kaiser Family Foundation study.

The study – Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform  – examines the potential changes suggested in several deficit reduction plans.

The study also estimates that raising the Medicare eligibility age would raise premiums by 3% for those who remain on Medicare and for those who get coverage through health reform's new insurance exchanges. The study assumes both full implementation of the Affordable Care Act and the higher eligibility age in 2014.

Among the estimated five million affected 65- and 66-year-olds, about three in four would pay an average of $2,400 more for their healthcare in 2014 than they would have paid if covered under Medicare, the study said. Nearly one in four are expected to have lower out-of-pocket spending, mainly due to the ACA's coverage expansions through Medicaid and the premium tax credits available to low- and middle-income Americans.

"Raising Medicare's age of eligibility would obviously reduce Medicare spending, but would also shift costs onto seniors and employers, and increase costs elsewhere on the federal ledger," said Kaiser Family Foundation Vice President Tricia Neuman. "This analysis drives home the tough policy choices that lie ahead when Washington gets serious about reducing the federal deficit."

In the absence of the health reform law, raising Medicare eligibility age would create more uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market.

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