Recently, Erskine Bowles, co-chair of the president’s deficit commission, suggested that the Super committee raise Medicare’s earliest age of eligibility to 67. According a report yielding from the Kaiser Family Foundation, Bowles’ recommendation would translate into 3.3 million people aged 65 years and 66 years becoming ineligible and paying more out-of-pocket for health care. 

The impact would also be felt by existing Social Security beneficiaries, aged 67 years and older, who would experience an increase in out-of-pocket health care costs. Additionally, these individuals would see their Social Security benefits reduce, as the healthiest, least expensive members of the Medicare risk pool, those aged 65 years and 66 years, would be removed. 

If Medicare cuts go into effect, the report indicates that seniors in two specific groups would experience an increase in out-of-pocket costs. The first are individuals aged 65 years to 66 years who purchased coverage through health insurance exchange and have incomes exceeding 300% to 400% of the federal poverty level. The second group includes retirees, with employer-sponsored health plans and retiree health plans. 

Out-of-pocket health care costs would grow on average by $4,300 in 2014 for 960,000 individuals aged 65 years to 66 years who purchase coverage through a health insurance exchange and have incomes exceeding 400% of the federal poverty level ($43,560). This would make them ineligible for subsidies available to exchange participants with lower incomes. 

For 240,000 individuals aged 65 years to 66 years who purchase coverage through a health insurance exchange and have incomes between 300% and 400% of the federal poverty level ($32,670 to $43,560), out-of-pocket costs would increase by $1,2000. 

Lastly, it is reported that out-of-pocket costs would increase $2,200 for 1.1 million retirees with employer-sponsored retiree health plans, if the increased cost to employers did not cause them to terminate these plans. Out-of-pocket costs for retirees with employer-sponsored health plans would increase $500 for 1 million retirees if the increased cost to employers did not cause them to terminate these plans.

The report goes on to estimatee that Part B premiums will be amplified by 3% in 2014 in addition to the increases produced by rapidly rising health costs. Nancy Altman, co-director of Social Security Works, points out that both political parties in Congress have offered plans that cut Social Security and increase the out-of-pocket health care costs of seniors, people with disabilities, and others who depend upon Social Security and Medicare.  Altman advises, “If [the political parties] decide to follow the advice of…Erskine Bowles and increase Meidcare’s eligibility to 67, they will shift costs to those least able to afford itthe sickest and oldest among us.”

Data from the Kaiser Family Foundation report also suggests that costs to Social Security beneficiaries could be substantially higher than estimated. If health insurance exchanges and subsidiaries enacted under 2010 Patient Protection and Affordable Care Act (ACA) are fully implemented by 2014, as the report presumes, raising the Medicare eligibility age could impact any or all four provisions of the ACA. According to the report, scaling back or repealing these ACA provisions would result and consume a much greater portion of Social Security benefits.

Source: Social Security Works