The hospital industry has mounted a fierce lobbying campaign to persuade Congress to raise the Medicare eligibility age from 65 to 67 by 2014. The hospitals are making the push in order to avoid billions of dollars of cuts in their future Medicare payments.
The deficit reduction plan agreed to by Congress calls for a 12-member Congressional “super committee” — six members from each party – to come up with between $1.2 and $1.5 trillion in budget cuts by Thanksgiving. If the committee can’t reach an agreement, hospitals and other health care providers will be hit with automatic Medicare payment reductions amounting to $45 billion over 10 years.
To prevent these cuts, the American Hospital Association is urging its nearly 5,000 members to lobby Congress to delay by two years the age that Baby Boomers can become eligible for Medicare. The hospitals have another incentive for requesting the change: private insurers pay them more than Medicare does, on average.
President Obama reportedly floated raising Medicare’s eligibility age during the deficit reduction debate, and it could be included in his recently proposed “modest adjustments to health care programs like Medicare.”
The hospitals maintain that the effect of delaying Medicare coverage would be minimized because the new health law allows the uninsured to buy their own health insurance through state insurance exchanges starting in 2014, and the law also provides a subsidy to employers who provide health insurance to their retirees.
But the employer subsidy would have little impact because less than a third of retirees age 55 to 64 get health coverage from their old employers. And Paul N. Van de Water, a Senior Fellow at the Center on Budget and Policy Priorities, argues that raising the eligibility age would simply shift costs from the government to the private sector. Although the federal government would save $5.7 billion, the change would cost potential beneficiaries, employers, states and other insureds $11.4 billion (chart).
Van de Water says two-thirds of 65- and 66-year-olds who lose their Medicare coverage and join the exchanges would pay an average of $2,200 more a year in premiums and cost-sharing charges. The influx of would-be Medicare beneficiaries into the exchanges would also drive up premiums for younger enrollees, and if the health reform law is repealed, the exchanges will vanish and large numbers of 65- and 66-year-olds would be uninsured. Many of these uninsured would end up in emergency rooms, which would not help the hospitals’ bottom lines.