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Kaiser Study: Raising Medicare Age Would Shift Costs

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A new study finds that raising the Medicare age under the healthcare reform law to 67 by 2014 would save the federal government an estimated $7.6 billion. But the change would also increase out-of-pocket costs for 65 and 66 year-olds by $5.6 billion and by $4.5 billion in employer retiree health care costs.

The Kaiser Family Foundation, Menlo Park Calif., published this finding in a summary of results from a study on the effects of raising Medicare’s age of eligibility to 67 from 65. The report was authored by researchers from the Kaiser Family Foundation and the Actuarial Research Corp., Columbia, Md.

The report adds the change in the Medicare age of eligibility would also raise premiums by 3% for individuals who stay on Medicare as well as those who purchase coverage through insurance exchanges mandated in the law.

If the health care reform does not become law, raising the age would of eligibility would result in a spike in the number of the uninsured, the report says. With the health reform law, 65 and 66 year-olds would be legally required to purchase coverage until they reach the age of eligibility.

The report adds that gross saving of $31.1 billion would be found in 2014, although those savings would be offset by increases in spending on Medicaid ($8.9 billion), tax credits for those purchasing through exchanges ($7.5 billion) and $7 billion in lost premium receipts from 65 and 66 year-olds that would be ineligible.

Health care costs for employers would also rise by $4.5 billion as they would have to cover a newly ineligible population.

–Michael K. Stanley