NCPA - National Center for Policy Analysis

Why Raising Medicare's Retirement Age Will Help Achieve Universal Coverage

January 2, 2013

The question of whether to raise Medicare's eligibility age from 65 years old to 67 years old has been discussed for years. Many liberal commentators have come out in fierce opposition to this idea, conjuring up several arguments about why increasing the retirement age would be a bad idea, says Avik Roy, a senior fellow at the Manhattan Institute.

However, all these arguments are outdated myths that don't take into account the way that the Affordable Care Act (ACA) has changed the health care industry.

Myth No. 1: Raising the retirement age would harm minorities and the poor.

  • This argument cites a 2003 study that claims that minorities and lower-income seniors have lower incomes and lower life expectancies.
  • But the ACA subsidizes health insurance for everyone under 400 percent of the federal poverty level.
  • Furthermore, if the retirement age isn't increased, politicians will make cuts to Medicare that make it harder for seniors to get doctors' appointments by reducing reimbursement fees.

Myth No. 2: Age-raising increases government health care costs.

  • The Congressional Budget Office (CBO) projects savings of $148 billion between 2012 and 2021.
  • Furthermore, even if younger people are taken out of the pool, increasing the average per-person expenditure, overall spending on Medicare will decrease.
  • Finally, opponents claim that Medicare spends less on health care than private insurance does on a per-person basis, meaning Medicare is more cost effective. However, Medicare artificially underpays hospitals to care for Medicare patients, leading hospitals to charge private insurers more.

Myth No. 3: Age-raising would throw more seniors onto Medicaid.

  • This is true considering that people who don't qualify for the ACA's exchanges would end up on Medicaid.
  • However, there is an easy solution for this: write a provision into the retirement age increase that allows all seniors above the age of 65 and under 400 percent of the federal poverty level to qualify for the exchanges.

Freeing up resources that would otherwise have been spent on wealthy retirees would mean that lower-income Americans are better able to get coverage, which is especially important considering the Congressional Budget Office estimates that even after the ACA there will still be 30 million uninsured Americans. 

Source: Avik Roy, "Why Raising Medicare's Retirement Age Will Help Achieve Universal Coverage," Forbes, December 12, 2012.


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