Raise Medicare Age? That’s Cost Shifting, Not Cost Saving

February 28, 2012
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Mitt “Two Cadillacs” Romney in his Detroit speech on Friday said he’d like to raise the age on Medicare eligibility to 67 to save the taxpayers money. A Congressional Budget Office report released last month found raising the Medicare eligibility age to 67 from 65 would reduce Medicare spending by $148 billion over the next decade, but people in that age group would pay more for their health care.

Mitt “Two Cadillacs” Romney in his Detroit speech on Friday said he’d like to raise the age on Medicare eligibility to 67 to save the taxpayers money. A Congressional Budget Office report released last month found raising the Medicare eligibility age to 67 from 65 would reduce Medicare spending by $148 billion over the next decade, but people in that age group would pay more for their health care.

Not only seniors would pay more. Their employers would pay more. The Social Security eligibility age for full benefits becomes 67 later in this decade. During those two extra years of working, future seniors will be eligible for Medicare. If they don’t get the government program, they will have to rely on their employers for health coverage. People between 65 and 67 will become the most expensive employees to cover, since the older one gets, the more one uses health care services. So any plan to “save” Medicare that relies on raising the eligibility age is essentially a plan to shift the costs from all taxpayers to a select group of employers who hire people or continue to employ people in that age bracket.

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Every health care economist knows that health insurance premiums paid by employers are a form of compensation. So Romney’s plan is essentially a massive increase in the wage bill for employers who hire or employ older workers. I wonder if the corporate types who are pouring money into his campaign have carefully considered the economic implications of this proposal.