As America ages, the bill for Medicare services is expected to grow. In addition, thanks to a much longer life expectancy, the length of time that people will be on the Medicare rolls will also rise significantly from what those numbers were when Medicare first started in 1965. We’ve also seen a rise in per capita spending thanks to chronic health issues and rising health care rates. Thanks to those choking numbers, there’s been increasing calls to cut Medicare spending by raising the eligibility age for Medicare from its current 65 years of age to 67. In some ways, this makes sense since by doing so we could gradually align Social Security’s full retirement age with the eligibility age for Medicare.
The problem is that there’s a widespread belief in Congress that doing so would save a bucket load of money. In 2012, the Congressional Budget Office (CBO) reported that by making the gradual change in eligibility from 65 to 67 the country could save $113 billion in Medicare costs during the first 10-years. Then the CBO took another look at the numbers and in October of this year reported that due to the high number of Baby Boomers that are expecting to continue to work and thus continue to rely on employer-provided health insurance and the overall general health of the Baby Boomers the numbers aren’t there. In fact, according to the CBO, making the change would save $19 billion over 10 years (a difference of about 60 percent). To put that in perspective, the change would mean a savings of 0.01 percent of GDP in 10 years or just 0.07 percent of GDP by 2038.
To read the updated CBO report go here.
