Costs Could Rise If Medicare Age Increased Proposals to increase Medicare's eligibility age to 67 from 65 have been gaining traction in Congress, and there's little doubt that the shift in health insurance coverage would reduce federal spending. But some experts say the costs could shift to employers and state governments, and actually cause an increase in overall health spending.
NPR logo

Increasing Medicare Age Could Lead To Higher Costs

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Increasing Medicare Age Could Lead To Higher Costs

Increasing Medicare Age Could Lead To Higher Costs

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


The congressional group known as the supercommittee appears far from agreement on a plan to slash the deficit. But there is one proposal that keeps cropping up - raising the eligibility age for Medicare. It's 65 now. Upping it would save federal tax dollars. But as NPR's Julie Rovner reports, that might have some unexpected impacts on the rest of the nation's health care system.

JULIE ROVNER, BYLINE: The so-called normal retirement age for Social Security is already being raised gradually from 65 to 67. So a lot of people think it follows that the age for Medicare eligibility should go up along with it. That includes people like GOP Presidential candidate and Texas Governor Rick Perry.

GOVERNOR RICK PERRY: We should look at gradually raising the age of Medicare eligibility.

ROVNER: And his rival, former Massachusetts Governor Mitt Romney.

MITT ROMNEY: As with Social Security, the eligibility age should slowly increase to keep pace with increases in longevity.

ROVNER: Raising Medicare's eligibility age simply makes common sense, says Joe Antos of the conservative think tank the American Enterprise Institute.

DR. JOE ANTOS: People are just healthier when they hit 65 than they were 40 years ago.

ROVNER: When Medicare first started.

ANTOS: in 1965, there were a lot more jobs that involved real physical effort, whereas these days, a lot of people turning 65, the physical effort is getting out of their desk chair at 5 o'clock.

ROVNER: There's another reason raising Medicare's eligibility age has gotten more politically palatable. It's been almost impossible for older people to buy their own health insurance due to pre-existing health conditions. And even if they could find coverage, it's usually been unaffordable expensive.

Antos is no fan of last year's health law. But if it takes effect as scheduled in 2014, it would make that particular problem go away.

ANTOS: No matter age you are, you can apply for insurance. And no matter what your physical condition is, you will be eligible.

ROVNER: Now if you're looking at raising the eligibility age purely as a mechanism to reduce the federal deficit, then it's definitely a winner, says Tricia Neuman of the Kaiser Family Foundation.

DR. TRICIA NEUMAN: This proposal will save money for the federal government.

ROVNER: But there's a downside.

NEUMAN: It would do so by shifting costs on to other payers.

ROVNER: Specifically, some costs would shift to employers because they'd have to continue to cover many of those people who'd continue to work. Some costs would also shift to those 65 and 66 year olds themselves, if they're no longer working. They'd have to pay for their own insurance. And states might have to pay more, too. If those people have low incomes, they might end up on Medicaid, rather than Medicare.

But it's not even a dollar-for-dollar shift. It turns out that moving 65 and 66 year olds out of Medicare would actually raise costs for the health system as a whole, according to the Kaiser analysis.

NEUMAN: So even though this proposal would save money for Medicare, costs overall will increase.

ROVNER: That's because taking the youngest, healthiest people out of Medicare could raise the premiums Medicare beneficiaries now pay. That's because as a group they would be older, sicker and more expensive. Meanwhile, those same 65 and 66 year olds, who are young by Medicare standards, are old compared to the working population. So delaying their entry to Medicare would also increase premiums for employers and younger workers.

Neuman says it's counterintuitive, but it has to do with switching those people now scheduled to go on Medicare into a different insurance risk pool.

NEUMAN: Both pools become more expensive and premiums for both age groups go up.

ROVNER: In the end, while the federal government would save a net of about six billion dollars in 2014 from raising the eligibility age, the nation's total health spending would grow by nearly eight billion dollars, illustrating, yet again, that nothing in health care is ever as simple as it appears.

Julie Rovner, NPR News, Washington

MONTAGNE: You're listening to MORNING EDITION from NPR News.

Copyright © 2011 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.