Washington Post Editorial Board Highlights Costs Of Opening Up Medicare To Younger Americans
WASHINGTON – As some politicians debate proposals to open up seniors’ Medicare to younger Americans, the editorial board of The Washington Post is urging lawmakers to consider the potential unaffordable costs and consequences.
- “Lowering the Medicare eligibility age would likely benefit mostly higher-income people, because Obamacare covers needy people at low or no out-of-pocket cost.” (The Washington Post, Editorial, 8/29/21)
- “Taking the just-fund-everything approach, the trillions add up quickly. The Committee for a Responsible Federal Budget estimates that the alleged $3.5 trillion outline would really cost more like $5 trillion to $5.5 trillion, when adjusting for the accounting gimmicks. Along with the $1 trillion bipartisan infrastructure bill the Senate recently passed, that could add some $4.3 trillion to the debt over a decade.” (The Washington Post, Editorial, 8/29/21)
- Economists at the Committee for a Responsible Federal Budget (CRFB) find lowering the Medicare age to 60 would cost $200 billion over 10 years. (Committee for a Responsible Federal Budget, 8/31/20)
- The American Rescue Plan Act (ARPA) “temporarily strengthened Obamacare, enabling more people to afford their insurance premiums and bringing the nation even closer to providing universal, affordable access to health coverage. Those changes, too, should become permanent.” (The Washington Post, Editorial, 8/29/21)
Recent research and analysis sheds additional light on the potential costs and consequences of opening up Medicare to younger Americans, including:
Unaffordable New Tax Increases, Higher Costs & Larger Deficits
- To finance “Medicare at 60,”Congress could pursue various tax increases.
- Congress could raise the additional Medicare tax rate by 285 percent in 2022. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Congress could also raise the standard Hospital Insurance (HI) tax, which would impact many more Americans. In 2022, the tax rate would need to be 3.25 percent—a 12 percent increase in the current rate. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Enrolling in Medicare could result in higher costs for 60- to 64-year-olds that could otherwise be avoided in the current health care system.
- 1.3 million individuals who would qualify for “Medicare at 60” are currently covered by a plan on the current marketplaces. Nearly 70 percent of this group currently receive subsidies and could end up paying more after transitioning to Medicare, particularly those with incomes above 135 percent of the poverty line, who would be required to pay Part B and Part D premiums. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- 17 percent of the newly eligible population could owe income-related premiums. This is far higher than the 7.7 percent share among existing Medicare recipients. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- In addition to Medicare premiums potentially costing more than plans from the Marketplace, the new Medicare plans could have higher cost-sharing requirements and add increased costs to families that are split between Medicare and Marketplace plans. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Already, Medicare is the second-largest single line item in the federal budget. It will soon surpass Social Security and grow more quickly than every other component. Under “Medicare at 60,” gross Medicare expenditures would rise by $82.9 billion in 2022 and total Medicare spending could rise by $995 billion over 10 years. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Overall, the federal deficit would rise by $32.2 billion in 2022 and $393.9 billion over the next 10 years (2022 to 2031). (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Absent alternative financing mechanisms, the Hospital Insurance (HI) Trust Fund would be depleted in 2024, two years sooner than currently projected. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
Creating Additional Risks To Health Care Affordability & Access
- “Medicare at 60” eligible Americans covered by Medicaid or employer sponsored insurance could owe new Medicare premiums while seeing few novel benefits from their Medicare enrollment. In many cases, these individuals could be required to enroll in Medicare or risk losing their retiree health benefits. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Medicare does not provide coverage to dependents that do not otherwise qualify for coverage, and over 15 percent of the “Medicare at 60” population have children under 26 living in their households — compared to seven percent of 65–69-year-olds. Policyholders of family plans could be unlikely to enroll in Medicare if it results in the loss of coverage for other family members. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Currently, automatic Medicare enrollment for Parts A and B are only available to those receiving Social Security benefits. Among the 60- to 64-year-old population, only 17.5 percent report Social Security enrollment. This has implications for enrollment as well as broader fiscal policy. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
- Lowering the eligibility age could affect labor markets if it induces some individuals to retire earlier. This could result in lower tax revenue, further straining the federal budget. A recipient’s decision to retire early could also increase Social Security outlays. (Lanhee J. Chen, Ph.D., Tom Church, and Daniel L. Heil, 6/23/21)
Most Americans are satisfied with their current coverage and prefer to build on and improve what’s working in health care rather than start over.
- The August 2021 edition of Voter Vitals – a nationwide tracking poll conducted by Locust Street Group for the Partnership for America’s Health Care Future – shows that 64 percent of votersprefer building on our current system rather than creating the public option, and 67 percent prefer building on our current system instead of opening up Medicare. (Voter Vitals, 8/21)
- The vast majority of voters with health insurance coverage (76 percent) are satisfied with their coverage, the survey finds. (Voter Vitals, 8/21)
- The findings of Voter Vitals align with other national polling, including from Gallup, which found that 74 percent of Americans rate their health care coverage as excellent or good. (Gallup, 12/14/20)