The Congressional Budget Office has significantly revised its estimates of how much would be saved by raising the Medicare age from 65 to 67. Previously the agency thought this change would save $113 billion over ten years but their new figure puts the saves at only $19 billion. That is just a few billion a year. From the CBO:
Implementing this option would reduce federal budget deficits by $19 billion between 2016 and 2023, according to estimates by CBO and the staff of the Joint Committee on Taxation (see Table 1). That figure represents the net effect of a $23 billion decrease in outlays and a $4 billion decrease in revenues over that period. The decrease in outlays includes a reduction in federal spending for Medicare as well as a slight reduction in outlays for Social Security retirement benefits. However, those savings would be substantially offset by increases in federal spending for Medicaid and for subsidies to purchase health insurance through the new insurance exchanges and by the decrease in revenues. [...]
CBO’s current estimate of the savings to Medicare from this option is much lower than its earlier estimates for proposals to raise Medicare’s eligibility age. For example, in a report published in January 2012, CBO estimated that such a policy change would produce budgetary savings of $113 billion over 10 years.
The current, lower estimate primarily reflects a new assessment by CBO that some of the people whose eligibility for Medicare would be delayed under this option would not cost Medicare as much, under current law, as CBO previously projected. CBO’s current estimate incorporates a detailed analysis of the cost of 65- and 66-year-old Medicare beneficiaries.
This is good news for Medicare and the American people. Raising the Medicare age was one of the worst policy ideas ever seriously discussed in recent years. It would raise premiums for millions of Americans across all age groups and increase the number uninsured seniors.
Now that the CBO has concluded this change would save very little money, there is no excuse for anyone to propose the idea.
Given the CBO’s new data, I would be very interest to see how much it would cost to drop the Medicare age down to 60 or 55. The price tag could be surprisingly small.