As If Privatizing Medicare Wasn’t Enough

By Jonathan Cohn for the New Republic

By now, virtually everybody has heard about the Medicare voucher scheme that House Republicans want to implement starting in 2022. Instead of getting comprehensive, government-run insurance, seniors would have to enroll in private insurance, using a federal subsidy too skimpy to pay for adequate coverage. According to estimates from the Congressional Budget Office, seniors would become responsible for about two-thirds of their personal medical expenses. Many seniors would endure significant hardship as a result.

But that’s not the only Medicare change in the House Republican budget. Under current law, you become eligible for Medicare on the day you turn 65. If the Republicans get their way, you wouldn’t become eligible for the new Medicare voucher until the day you turn 67.

The change would happen gradually, with the eligibility age rising two months every year, starting in 2022. And, in the grand scheme of things, it’s not like that many people are between the ages of 65 and 67 anyway. But think for a second about who those people are–and the insurance options they’d have available to them without Medicare.

Remember, the House Republican budget would also repeal the Affordable Care Act. That would leave insurance companies free to charge higher premiums, restrict benefits, or deny coverage altogether to individual applicants who have pre-existing conditions. Given the relatively high incidence of conditions like hypertension, arthritis, and vision problems among older Americans, it’s safe to assume many seniors would have trouble finding affordable coverage–if, indeed, they could find coverage at all.

To be sure, pre-existing conditions wouldn’t affect older Americans who could get coverage from large employers, either as current workers or younger retirees. That’s how most “younger seniors” get insurance now. But the addition of so many 65- and 66-year-olds to employer insurance plans would raise benefits costs for businesses and, eventually, their workers. In the late 1990s, when politicians last talked seriously about raising the Medicare eligibility, Hewitt’s Frank McArdle ran the numbers for the Kaiser Family Foundation and determined that

Raising the Medicare eligibility age to 67 would mean that plan costs for a 65-year-old retiree could be two to four times higher (depending on plan design) for each year of coverage without Medicare.

For a typical large company with a predominately younger workforce, the employer’s actuarial cost for lifetime retiree health benefits would rise about 16 percent (18 percent for a large employer with an older workforce).

That was more than a decade ago, obviously. And, as far as I can tell, nobody has crunched the numbers on how this year’s Republican budget would affect 65- and 66-year-olds specifically. But in a 2003 study eventually published in Health Affairs, Urban Institute researchers Amy J. Davidoff and Richard W. Johnson concluded that simply raising the eligibility age for Medicare

would leave about 9 percent of [65- and 66-year-olds] uninsured, while another 11 percent would be underinsured because they could only afford limited nongroup policies.

And that’s actually a best case scenario, since employer insurance has become less available since that study appeared and because the House Republicans would reduce funding to Medicaid, which is the primary safety net for the poor.

So just to sum up: Raising the age at which Americans become eligible for Medicare, or whatever program Republicans put in its place, would make health insurance more expensive for businesses, workers, and their employees, all while leaving one-fifth of future 65- and 66-year-olds with too little insurance or none at all. And oh, by the way, this is all part of a Republican budget that enacts huge tax breaks for the wealthy. You don’t have to be a senior citizen to get grumpy about that.