It never rains that it doesn’t pour. Just days after Socialist Sen. Bernie Sanders, I-Vermont, called a hearing on his proposal for a payer system of socialized medicine, the Congressional Budget Office (CBO) announced a report Analysis of one of the Left’s supposedly “moderate” proposals for expanding government healthcare: lowering the age of Medicare eligibility to 60.
This type of “incremental” reform seeks to transition to the individual payer via the installment plan, gradually expanding government care – and choking off private health insurance – until only the government “option” remains. But the CBO report illustrated several ways this proposal would do further damage to America’s healthcare system.
Would hasten Medicare bankruptcy
The year before Obamacare passed, the program’s trustees estimated The Medicare Part A Trust Fund would file for bankruptcy in 2017 — five years ago. Just the Obamacare financial shenanigans that claimed the federal government could use the same thing Medicare savings both Funding Obamacare and extending Medicare’s solvency has kept the program going — but only on paper.
The CBO report said the Budget Office “did not analyze how the policy would affect the financial operations of the Hospital Insurance Trust Fund.” But it doesn’t take a rocket scientist to quantify the impact.
CBO estimated that “Part A spending would increase by $146 billion” from 2026, when the Budget Office expected the policy to go into effect, through 2031. Part A spending is transitioning about $20 to $30 billion a year and virtually no new payroll tax revenue, the trust fund — which had only $134.1 billion available As of December 2020 – would default in months instead of years.
The bottom line for Medicare expansion doesn’t look too appealing, either. CBO estimated that lowering the Medicare eligibility age to 60 would increase the federal deficit by $155 billion over six years (2026-2031) while reducing the number of uninsured Americans by just 400,000 — not nearly enough to support such an increase in the to justify spending, let alone more turbulence in healthcare.
Lowering the Medicare eligibility age would also pose other logistical issues and make implementation more difficult. For starters, lowering the Medicare eligibility age to 60 means that for the first time, people who are not eligible for Social Security (either disability or retirement benefits) can participate in the program. If Social Security didn’t automatically enroll people in Medicare, they would have to seek out the program, and the federal government would have to find some other way to get premium payments than deducting them from Social Security checks.
In addition, lowering the eligibility age increases the possibility of shared coverage within a household. If a parent qualifies for Medicare but a spouse or children do not, families could end up receiving coverage from two different sources.
Another, somewhat surprising, logistical obstacle arises from the impact lowering the Medicare eligibility age will have on insurance premiums. Progressives have often claimed that moving people aged 60 to 64 would create a “win-win” premium scenario: adding people who have lower health care costs than “older” seniors will lower the median cost in Medicare, while being removed from the exchange lower average premiums for the non-Medicare insurance market.
In its analysis, the budget office contradicts the second pillar of this thesis:
CBO and [the Joint Committee on Taxation]Analysis of suggests that although older insureds spend more on health care, on average, their premium payments (including individual premium contributions and applicable PTCs [premium tax credits, i.e., federal insurance subsidies]) would exceed insurers’ claims and administrative expenses under current law. As these older policyholders would exit the non-group market under the policy, premiums would increase.
To put it another way, CBO believes the “early retirees” who buy stock market insurance before they’re eligible for Medicare are relatively healthy. On average, these individuals’ healthcare costs do not exceed their premiums – in fact, they are subsidizing other, less healthy individuals, so removing these healthy 60-64 year olds would increase average premium levels.
This fact shows how far the stock exchanges in many states have become de facto High-risk pools, where only the most ill individuals or those eligible for the largest subsidies bother to sign up for coverage.
Some on the left might argue that the hypothetical scenario analyzed by CBO does not accurately reflect what an expanded Medicare program might look like. For example, CBO anticipated that existing Medicare state subsidies for the over-65s would be extended to those aged 60-64, rather than exploring a program where 60-64-year-olds could use their own money to invest in Medicare could buy.
But that kind of “Medicare buy-in” would face similar, if not greater, logistical obstacles. For example, would policymakers separate the existing Medicare program from the “buy-in” for those under 65—and how would this be done in an actuarially fair manner? Could the 60- to 64-year-old population use Obamacare exchange subsidies for the Medicare “buy-in” program, and if so, how would those subsidies be calculated and applied?
Engaging in these kinds of cumbersome logistical exercises for a program that would do next to nothing to increase the number of Americans with health insurance — and at a time when Medicare is already facing bankruptcy — is more than a struggle against advanced windmills. It also shows the extent of the left’s obsession with taking control of the healthcare system.