Medicare Advantage

Would increasing the Medicare age help or hurt the system?

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With the Social Security retirement age changing to 67 in 2017, various politicians have called for increasing Medicare’s qualifying age, in an effort to help the U.S. economy. But as a recent study shows, rather than saving money, this would actually have little, if any benefit.

The reason for this is the ever-present balancing act that the federal government has to deal with when it comes to paying for Medicare. Basically, if the age were raised, financial costs would simply shift from one government program to another.

Discussing the Medicare and Medicaid, dual eligibles

The study was conducted by the Urban Institute, a Washington D.C.-based think tank. The researchers found that a later age for Medicare eligibility would be ineffective due to a group known as dual eligible beneficiaries (dual eligibles). These are people enrolled in both Medicare and Medicaid.

Specifically, dual eligibles receive full Medicaid benefits. But this group also includes those who only receive assistance through Medicare premiums or cost sharing. They must meet certain income and resource requirements. Dual eligibles are entitled to either Original Medicare (Parts A and B) or a Medicare Advantage (MA) Plan. They may also qualify for the Medicare Savings Program; this include one of the following four programs:

  • Qualified Medicare Beneficiary (QMB)
  • Specified Low-Income Medicare Beneficiary (SLMB)
  • Qualifying Individual (QI)
  • Qualified Disabled Working Individual (QDWI)

Shifting coverage and costs to Medicaid

It was found that if the Medicare age was raised, both the federal government and states would actually end up paying more for dual eligibles’ healthcare costs. If the age were raised to 70, a 69-year-old dual eligible would lose their Medicare coverage. And it’s true that this would reduce the number of dual-eligible beneficiaries nationwide, which would also save on healthcare costs.

The researchers found that these costs would instead shift from one government program to another. An estimated 277,000 non-disabled dual eligibles would be affected by raising the Medicare eligibility. And this number increases to 915,000 individuals if the age is raised to 70. This is because this beneficiary – and many others — would still receive their healthcare coverage through Medicaid.

This is the social healthcare program for low-income individuals and families. Among government programs, Medicaid is valued by seniors, especially because it provides long-term care services, such as nursing home reimbursement.

In total, more than 66 million people are eligible for Medicaid; nearly 1.5 million are between the ages of 65 and 69. Among all Medicaid beneficiaries, 63 percent of total spending goes to those between the ages of 65 and 66 years old. And when this age group is extended to those between 67 and 69 years old, these healthcare expenditures dramatically rise.

The study found that an eligibility age of 67 would increase federal Medicaid liability costs by $766 million; this skyrockets to nearly $4 billion if the age is increased to 70. “We estimate that nearly all the costs saved by Medicare for this population would be shifted to other government payers,” states the researchers.

There would also be a hefty financial burden at the state level. If the Medicare eligibility age were raised to 67, the states would have their Medicaid funding increased by $369 million. And if the age were raised to 70, this funding would be increased by $1.9 billion.