Lowering Medicare age to 60 would increase coverage -- but also spending
Spending would increase, researchers say, but so would taxable revenue due to employers having to pay less for employee health insurance.
Policymakers often propose lowering the Medicare eligibility age from 65 to 60 as a way to expand health care coverage. It would help accomplish this goal but also carry a hefty price tag, according to research from the Urban Institute with funding by the Robert Wood Johnson Foundation.
Under the proposal, adults ages 60 to 64 currently enrolled in employer-sponsored insurance could choose to drop their current coverage and enroll in Medicare Parts A, B and D, or they could keep their current coverage and additionally would be enrolled in Medicare Part A as secondary insurance. Doing so would result in several changes in coverage, the report said.
A large share of the 12 million people ages 60 to 64 with employer-supplied insurance (77 percent or 9.2 million), would retain their current coverage, but about 23 percent (2.8 million) would leave their employer coverage, with most enrolling in Medicare Parts A, B and D. Most of the 2.8 million people ages 60 to 64 who currently have nongroup coverage would join Medicare Parts A, B and D.
The current Medicaid population (2.7 million people ages 60 to 64) would become dual eligible, and 389,000 currently uninsured people eligible for Medicaid would newly enroll in Medicare as dual enrollees. Under the policy, dual enrollees would have Medicare as primary coverage and would find Medicare more attractive than they find Medicaid under the baseline.
Medicare Parts A, B and D would have 5.1 million new beneficiaries among people ages 60 to 64, whose total population is 21.3 million. Most of these new enrollees would come from employer or nongroup coverage. Another 3.3 million would become dual eligible.
Financially, the net result would be an increase in federal spending of $44.6 billion. This new spending would be offset somewhat by additional federal revenue. Overall taxable wages would increase as employers pay less in premiums for workers, so tax revenues would increase by $2.8 billion. Deducting this from new federal spending, the federal deficit would increase by $41.9 billion in 2023. Over 10 years, this would amount to $504 billion.
“Though coverage gains would be small, lowering the age of Medicare eligibility from 65 to 60 would lead to gains in benefits and affordability overall,” said John Holahan, institute fellow at the Urban Institute. “However, these gains would also be tied to a large increase in federal spending.”