Filed Under:Markets, Employee Benefits

CBO cuts Medicare change savings estimate

CBO Director Douglas Elmendorf (AP photo/J. Scott Applewhite)
CBO Director Douglas Elmendorf (AP photo/J. Scott Applewhite)

Raising the normal Medicare eligibility age to 67, from 65, might not increase the number of uninsured people very much but might not save much money, either.

Paul Jacobs and other analysts at the Congressional Budget Office, a congressional think tank, give that assessment in a new budget effects estimate.

In January 2012, CBO analysts estimated increasing the Medicare eligibility age two years would reduce growth in the federal budget deficit by $113 billion over 10 years, or an average of about $11 billion per year.

The analysts have now cut the estimated effect to about $19 billion over 10 years, or $1.9 billion per year.

Many people who retire around age 65 and their dependents have some kind of employer-sponsored coverage, and they now should have an easier time getting individual coverage, because the Patient Protection and Affordable Care Act (PPACA) will require carriers to sell coverage on a guaranteed-issue basis starting in 2014, the analysts said.

The biggest factor reducing the savings impact estimate is that the CBO analysts now believe that 65-year-old and 66-year-old Medicare enrollees tend to have relatively low levels of claims compared to older enrollees, anyway, the analysts said.

Another major factor is that many 65-year-old and 66-year-old Medicare enrollees still have some kind of major medical coverage from an employer plan, a spouse's employer plan, or a retiree health plan, and that tends to hold down the cost of covering younger enrollees, the analysts said.

The analysts noted that raising the Medicare eligibility age would increase the amount the government must spend on Medicaid benefits and public exchange premium subsidies. But the effect of increasing spending on health aide programs is about the same size in the new estimate as it was in earlier estimates, the analysts said. 

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