The study projects that raising the age of Medicare eligibility to age 67 in 2014 would result in $31.1 billion in gross Medicare savings in 2014 because Medicare would no longer be covering 65- and 66-year-olds. The gross savings are estimated to be partially offset by increases in federal spending for individuals who would be covered by Medicaid ($8.9 billion) and for individuals receiving premium tax credits in the exchanges ($7.5 billion). The gross savings also would be offset by a $7 billion reduction in Medicare premium receipts from 65- and 66-year-olds who would no longer be enrolled in the program.
In addition, the study finds that health-care costs for employers would increase by an estimated $4.5 billion in 2014 as employer plans become the primary payer for 65- and 66-year-olds who would no longer be eligible for Medicare, rather than provide supplemental coverage that wraps around Medicare.
Other key findings from the study include:
- Premiums for people younger than 65 purchasing coverage through health reform’s insurance exchanges would rise by an estimated 3 percent as a result of adding 65- and 66-year-olds to the exchanges.
- Similarly, Medicare Part B premiums would rise by an estimated 3 percent, as the youngest seniors are removed from the Medicare risk pool, resulting in higher per-beneficiary costs for those remaining on Medicare.
- Costs to states would increase by an estimated $0.7 billion overall. This reflects higher state Medicaid costs associated with 65- and 66-year-olds who would otherwise be dual eligibles (covered by both Medicare and Medicaid) and also from higher costs associated with higher Medicare premiums for remaining dual eligible beneficiaries for whom Medicaid pays the Medicare premiums. Those higher costs are offset in part by some affected beneficiaries qualifying for full federal funding under health reform’s Medicaid expansion.
The study, Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform, is the first in a new series of Kaiser Family Foundation studies examining the effects of proposed Medicare changes on the program’s beneficiaries, the federal budget and other stakeholders, as part of the Kaiser Project on Medicare’s Future.
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