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.
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.