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Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform

Several major deficit-reduction and entitlement reform proposals include raising Medicare’s age of eligibility from 65 to 67 as a way of improving Medicare’s solvency. This Kaiser Family Foundation report estimates the expected effects of such a change on the federal budget, as well as on affected seniors’ out-of-pocket costs, employers, Medicaid and others in light of the major changes in coverage enacted under the 2010 health reform law.

The study estimates that raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree health-care costs. In addition, the study projects that the change would raise premiums by about 3 percent both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges. The study assumes both full implementation of the health reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal.

In the absence of the health reform law, raising Medicare’s age of eligibility would result in an increase in the uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market in the absence of Medicare. With health reform, virtually all 65- and 66-year-olds would be expected to obtain alternative sources of coverage.

The study is authored by researchers from the Kaiser Family Foundation and the Actuarial Research Corporation and is available online. It 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.

NOTE: Originally released in March 2011, this report and news release were updated in July 2011 to reflect additional provisions of the 2010 health reform law. These adjustments result in lower estimates of net federal savings and aggregate out-of-pocket spending attributable to raising the age of eligibility.

News Release

Report (.pdf)

Related Resource:

Data Note: Public Opinion Polling on Raising the Age of Medicare Eligibility: Historic Trends and Current Nuances