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To reiterate a point made in an earlier post, that raising the Medicare eligibility age might save the federal government some money but would actually cost individuals, states, and private insurers far more than it would save, here's a straightforward explanation from The Incidental Economist.

Will the federal government save money by not insuring you for those two years? Yes, it will, about $5.7 billion dollars. So, clearly costs would be shifted: a $5.7 billion federal savings is exchanged for $3.7 billion in would-be beneficiary spending. Maybe some people think that’s a worthwhile trade. However, consider that some 65 and 66 year olds who no longer qualify for Medicare would be uninsured. That might bother you. Maybe not.

Even ignoring the effects on the uninsured and sticking to dollars and cents, we’re not even remotely done. What will also happen is that employers will spend an additional $4.5 billion to cover those who would otherwise be on Medicare. Premiums in the exchanges and for Medicare would go up because the average age of both groups would be higher causing the risk pool of both to be less healthy. The cost due to that would be $2.5 billion. States would also spend a little more.

All told, the cost to the system of raising the Medicare age to 67 would be $11.4 billion in 2014, which is a high price to pay for $5.7 billion in federal savings. It’s exactly a factor of two too high. That’s a massive cost shift. Let’s put it this way, how much would you want to pay for the federal government to save $5.7 billion? I hope your answer is no greater than $5.7 billion. (If not, I’ve got a business proposition for you.) Paying $11.4 billion is a rip off.

In case you're more of a visual kind of person, here's the CBPP's graphical representation of those figures.

CBPP medicare costs chart

It's a bad, bad, bad idea that in the process of shifting costs, manages to double them. And it's going about this whole lowering health care costs thing exactly backwards.

Originally posted to Joan McCarter on Wed Aug 24, 2011 at 09:53 AM PDT.

Also republished by Daily Kos.

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Comment Preferences

    •  An Article about REALITY!!! (0+ / 0-)

      I especially like the last part of the article that comments on the reduction of market power that results from removing people from the Medicare pool.  The objective SHOULD be to enroll MORE people in the Medicare pool so as to strengthen the bargaining power of the Medicare administrators.  That is why Medicare Buy In is so important.  The Buy In would IMMEDIATELY  save most Americans 17.6% on the amount they currently pay for health insurance without increasing Medicare costs. But the real gains are from the increased monopsony power of the Medicare system.

  •  Won't it also shift (4+ / 0-)
    Recommended by:
    Cassandra77, jfromga, tardis10, auapplemac

    costs to "Obama care" subsidies to buy insurance?

    The American people must wise up and rise up!

    by TomP on Wed Aug 24, 2011 at 09:57:42 AM PDT

    •  It would seem so. (2+ / 0-)
      Recommended by:
      WheninRome, zaka1

      Also,someone might pay this to a private insurer for those 2 years,significantly reduce their retirement nest egg doing so,and then end up needing other types of govt. assistance later in life.
      But the private insurance companies profit.

      "George RR Martin is not your bitch" ~~ Neil Gaiman

      by tardis10 on Wed Aug 24, 2011 at 07:51:04 PM PDT

      [ Parent ]

      •  And can you imagine (1+ / 0-)
        Recommended by:
        tardis10

        ... how astronomical those premiums would be for people 65 and 66 years old, many of whom will have some form of pre-existing condition? From what I've seen checking into insurance for a 55-yr-old, let alone a 65-yr-old, many seniors would just go without -- and get sicker, placing a heavier burden on Medicare when they finally are eligible.

        •  insurane rates go up at 50 & 60 (1+ / 0-)
          Recommended by:
          denise b

          Before I went on Medicare last year, Anthem blue cross raised my premiums 40%. They had been raising it about 20-30% per year ffrom age 60. I am a very healthy person and at age 64 my individual insurance cost me $975 per month, with a 4,000 deductible, plus and additional $500 deductible for prescriptions, and a cop pay of $30..00 per visit.

          I can tell you ALL seniors will fight this.

    •  This a tax on people that depend on Medicare... (0+ / 0-)

      What happens to their no tax pledge when it only hits the people???

      I am here to represent the democratic wing of the Democratic Party. Roar louder!

      by Josiah Bartlett on Wed Aug 24, 2011 at 07:51:42 PM PDT

      [ Parent ]

  •  Sing it Joan. It just shifts costs - ultimately (14+ / 0-)

    back to Medicare in 2 years, when uninsured people like me will be 2 years older and sicker because of lack of care.  A few will die, but the majority will just hang on longer and be sicker when they get into Medicare.
    This one makes my head explode.  Its so clueless.
    It confirms my previous belief that none of these middle aged white men knows what its like at all out here.
    I had individual health insurance until I turned 60.
    Blue Cross kept raising the rates till they got to be as much as my mortgage payment.  And that was for a
    $2,500. deductible.
    I still have 2 and a half years till I'm 65.
    And I hate these people for proposing such a cruel
    idea.  Yeah, good idea.  Prolong the fucking terror.
    Maybe they'll die of a fear induced heart attack.

    We're the Honey Badger wing of the Donner Party. We're mad as hell and we're not gonna take it anymore.

    by Cassandra77 on Wed Aug 24, 2011 at 10:05:47 AM PDT

  •  If they lowered the age for Medicare (10+ / 0-)

    it might save costs.  IMO many folks in their mid-to-late 50's and early 60's are without insurance or are under insured and are not getting the care they need, which means by the time they hit the magic age of 65, their medical costs are higher.

    Also, I suspect that some folks in that same age group are hanging onto jobs that they really don't want, only because of having health care coverage.  If older Americans could get onto Medicare at an earlier age, perhaps some of them would look for jobs that are part-time, freeing up full-time work for some of the unemployed.  (I would be one of those people looking to downsize my job).  

    Many decades ago my Dad stayed with his company for 15 years for the health insurance.  He was afraid that he would not be able to get insurance at another place of employment due to a pre-existing heart condition.  

    •  sort of a 3/5 compromise (3+ / 0-)

      Rather than pushing for universal /  single payer health care...drop the Medicare age by 10 years now.  See how it goes.  Drop it another 10 years to age 45 a bit later, and so on.  

      Once folks experienced the benefits of good health care and the freedom from being tied to a job due to health insurance, they will never want to go back.

    •  people choosing not to work was one of the (4+ / 0-)

      outcomes the analysis of HCR showed. of course, Republicans tried to spin it as costing jobs, even when it was people voluntarily choosing not to work (figure that out).
      I think people being free to change jobs, start businesses, not work, relocate and the like is one of the great benefits of HCR as well as Medicare.

    •  Each time I read diary here about raising the age, (0+ / 0-)

      I always ask the same question and never seem to get an answer...

      Won't ObamaCare (let's own this name!) cover these people until they qualify?

      They would be covered for preexisting conditions. Hopefully the premium will be low or subsidized.

      They would pay for ObamaCare just as you now have to pay for Medicare.  It is not free. Nor are the MediGap plans which are offered by the dreaded insurance companies. So even if they are eligible at 65, they still have to pay something every month.

      I pay a little over $300 for both plus another $40 for the pharmacy program. I did choose the highest cost Medigap and drug plan so my monthly cost is higher than many others.

      Most of the proposals to raise the age won't fully take place for years. And most people 65 still want to work. I have Medicare and SS, and also work part time. This keeps me sharp, creative and motivated.

      Many citizens who are retired contribute there time to non profits. Gives them something to do.

      Many who are forced to retire due to age would rather continue to be active in some manner.

      Progressives will win when we convince a majority that they, too, are Progressive.

      by auapplemac on Wed Aug 24, 2011 at 09:13:38 PM PDT

      [ Parent ]

      •  I don't think anyone really knows the (1+ / 0-)
        Recommended by:
        auapplemac

        answer, given that Obamacare has yet to actually engage fully. Will it survive the legal challenges, and if so, what will it look like then? Are they covered? Heck, I dunno.

      •  I could be wrong but I thought that there is (0+ / 0-)

        a 6 month waiting period to get on Obamacare.  That could be disasterous if you have a serious injury or illness while waiting.

        I am with you on wanting to work past 65 (partly to keep sharp and partly to keep in touch with others socially), however, I want to work part time.  Few, if any businesses offer health insurance to part timers.

        I pay $500 per month for my insurance now.  That is 1/4 of my net monthly income.

        I would go on Medicare in a heartbeat if it were offered to me.

  •  A completely horrible idea (5+ / 0-)

    for so many reasons.

    Krugman was on this today also:

    The Strange Power of Really Bad Ideas, Medicare Edition

    We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

    by denise b on Wed Aug 24, 2011 at 11:42:03 AM PDT

    •  Insurance companies behind this? (4+ / 0-)

      From the Krugman piece

      Second, raising the Medicare age would make America as a whole poorer — because while it might save the government some money (and even that isn’t totally clear, because treatment of some conditions would be delayed and impose higher costs when people finally do get on Medicare),it would push people into higher-cost private coverage.Austin Frakt estimates $2 of private costs for every dollar of budget savings.
      •  I doubt it very much (1+ / 0-)
        Recommended by:
        divineorder

        Why would they want to take on a bunch of 65-year-olds, half of whom won't be able to afford private coverage anyway? And I'm sure business doesn't want it either - a lot of private plans now kick people off at 65, which makes them cheaper.

        No, I think this is on our elected representatives and those who hate social insurance for ideological reasons.

        That any Democrat would even consider such a stupid, stupid thing, though - it's pretty hard to comprehend.

        We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

        by denise b on Wed Aug 24, 2011 at 08:38:32 PM PDT

        [ Parent ]

        •  What about ObamaCare? These people will be covered (0+ / 0-)

          by the government program including pre-existing illnesses and the premium is supposed to be low or even subsidized in some cases.

          If the ObamaCare coverage and premium is in the range of what everyone now pays for Medicare and Medigap plans, what difference does it make?

          Progressives will win when we convince a majority that they, too, are Progressive.

          by auapplemac on Wed Aug 24, 2011 at 09:17:16 PM PDT

          [ Parent ]

          •  IF IF IF IF IF (2+ / 0-)
            Recommended by:
            divineorder, bryduck

            Right now it ISN'T "in the range of what everyone now pays for Medicare and Medigap plans", it's ridiculously extortionate and insanely complicated. And much of it isn't even in force yet. Remember that "beginning in 2014" clause on so many parts?

            And IF it could be brought into line with what it was "supposed" to be and what too many people think it is - it wouldn't be what the Almighty Health Insurance Industry wants.

            If it's
            Not your body
            Then it's
            Not your choice
            AND it's
            None of your damn business!

            by TheOtherMaven on Wed Aug 24, 2011 at 10:43:47 PM PDT

            [ Parent ]

        •  It was because insurers wouldn't insure ... (0+ / 0-)

          ... older folks, or charged such sky-high rates that few seniors could pay, that we got Medicare enacted in the first place.

  •  President Obama Repeatedly Says (2+ / 0-)
    Recommended by:
    divineorder, Brooke In Seattle

    he want to move the country forward.

    And it's going about this whole lowering health care costs thing exactly backwards.

    Readers & Book Lovers Pull up a chair! You're never too old to be a Meta Groupie

    by Limelite on Wed Aug 24, 2011 at 07:34:42 PM PDT

  •  This is very enlightning, but I am (6+ / 0-)

    very discouraged.

    I'm 58 now.  Seems I will never get on insurance of any kind.

    Why not just ask some of us to volunteer to die?  

    866-338-1015 toll-free to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them.

    by cany on Wed Aug 24, 2011 at 07:35:34 PM PDT

  •  I don't think those spending totals (5+ / 0-)

    are correct -- and here's why:

    Employers aren't going to spend that extra money on anyone. They will just let people go at 50 like they do right now. It's almost funny how "concerned" some seem to be about the spending that will happen in that age group if this mad plan comes to fruition.

    The employers won't be paying, and the people -- who will have no jobs and no savings left by the time they are Medicare eligible -- won't be paying either. Lots of money will be saved!

    Sadly, the opportunity cost will be the loss of all those parents and grandparents who can't afford care for treatable conditions and so will forgo treatment and die.

    It didn't have to be like this, but it probably will.

    When did people turn so goddamn cold?

    "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

    by Brooke In Seattle on Wed Aug 24, 2011 at 07:40:09 PM PDT

    •  Reaganomics in Action n/t (1+ / 0-)
      Recommended by:
      bryduck

      If it's
      Not your body
      Then it's
      Not your choice
      AND it's
      None of your damn business!

      by TheOtherMaven on Wed Aug 24, 2011 at 10:45:40 PM PDT

      [ Parent ]

    •  Dovetails nicely with "Right to Work" (0+ / 0-)

      laws, doesn't it? Employees' salaries getting too expensive for you? Fire them with impunity. Employee goes out on medical leave? Once s/he comes back, fire him/her before the insurance premium escalates. It's "Win the Future" after all, not "Win the Present" or "Jebus Christ we need to do something to save the country right now!"

  •  Am important analysis (2+ / 0-)
    Recommended by:
    Josiah Bartlett, divineorder

    The whole concept of health care costs is far more complicated than most people will ever be able to comprehend, unfortunately for everyone.

  •  Deferred care (0+ / 0-)

    When they figured on the savings to the govt, they probably didn't factor in deferred costs.  As patients near Medicare eligibility age, whoever is paying for their care (their insurer, some free clinic, themselves out of pocket) tends to defer anything at all expensive off to the impending period of Medicare eligibility.

    The older the patient gets, the riskier this strategy becomes.  Were this delay in eligibility to go into effect, a lot of those folks would arrive at age 67 and eligibility with conditions that might have been prevented or more easily and less expensively treated had they had comprehensive coverage during the preceding two years.

    The only thing more expensive than providing good quality, comprehensive medical care is not providing good quality, comprehensive medical care.

    We should have destroyed the presidency before Obama took office. Too late now.

    by gtomkins on Wed Aug 24, 2011 at 08:27:54 PM PDT

  •  hideous (1+ / 0-)
    Recommended by:
    Lucy2009

    I have posted a number of times,  raising the medicare age to 67 is the most hideous thing that any democratic president has ever purposed.

  •  Why even talk about savings to the government? (0+ / 0-)

    Isn't the point of the government is to provide general welfare to the people?

    If we just want to save money, there are all kinds of things that can be done:

    - The Federal Government owns nearly 650 million acres of land - almost 30 percent of the land area of the United States.  At the average price of $2140 per acre, that's $1.3 trillion - we can close budget deficit right now.  Plus, no one would need BLM and other agencies that care for this land, so even more savings.
    - The Federal Government owns over 900,000 buildings and structures, worth probably another cool trillion.  Sell that, and again you get a nice chunk of change, plus you can close down part of GSA.

    Are these ideas idiotic?  Of course, but so is the idea of raising retirement age.  In fact, the correct public policy would be Medicare for all, with the first step of it being Medicare for 55+.

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