For weeks, congressional Democrats have been pushing to lower Medicare's eligibility age from 65 to 60 as part of their $3.5 trillion spending bill.
A new paper from the American Action Forum (AAF) by Christopher Holt and Stephen Parente reveals just how radical that change would be. Such an expansion of Medicare would cost taxpayers a minimum of $380 billion over the next decade — and possibly more than $1 trillion.
The belief that Medicare ought to be available to all Americans 60 and over has become an article of faith across the Democratic caucus. President Joe Biden promised a lower Medicare eligibility age during his campaign for the White House.
And in the last few months, the idea has earned the support of over 100 House Democrats, as well as prominent progressives like Sen. Bernie Sanders, I-Vt., and Sen. Elizabeth Warren, D-Mass.
Medicare can scarcely afford to take care of its legacy population of people 65 and up.
The latest report from the program's trustees projects that the entitlement's Part A hospital insurance trust fund will run out of money in just five years.
That's an argument for raising the eligibility age, especially as people live and work longer — not lowering it. Congress responded to Social Security's long-term fiscal challenges by gradually raising the age at which people can claim full benefits.
Why can't we do the same for Medicare?
The American Action Forum report considers two scenarios for Medicare at 60.
Under the first, employers would continue to offer private coverage to workers aged 60 to 64 even though they'd be newly eligible for Medicare.
So seniors would have the option of signing up for the federal entitlement or staying on their employer-sponsored plan.
Presumably, at least some seniors would choose the latter.
Granting these somewhat optimistic assumptions, Holt and Parente conclude that lowering the eligibility age would cost the federal government an additional $380 billion over a decade.
In all likelihood, the cost would be far higher.
It makes little sense for employers to continue to offer health insurance to older employees if the federal government will pick up the tab through Medicare.
Further, Americans over the age of 60 are expensive to insure.
They're at much greater risk of developing — or already dealing with — expensive chronic conditions or acute ailments. Private companies would gladly shift the costs of covering those workers to the federal government.
Consequently, it wouldn't take long for the private market for the newly eligible Medicare population to evaporate. If that happens, according to the American Action Forum, the Democrats' proposal would cost a whopping $1.8 trillion over the next decade.
Older adults are among those least in need of a government handout. According to a recent study by the consulting firm Avalere, of the 24.5 million Americans who could become eligible for the entitlement under this proposal, just 8% currently lack insurance.
By comparison, the uninsured rate among all adults was 12.5% in 2020, a recent report from the Commonwealth Fund estimates.
The American Action Forum study estimates that lowering the Medicare age will likely reduce the number of uninsured Americans by 3.9 million — at a moment when an estimated 30 million Americans lack coverage.
That works out to a cost of as much as $58,000 per newly covered individual. If that's not a sign that progressive healthcare policy has become unmoored from reality, nothing is.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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