Raising Medicare Age Will COST Money and It Is Bad for Health

[eridani]

http://theincidentaleconomist.com/wordpress/delaying-medicare-eligibility-is-bad-for-health/

By now most of the blogosphere has weighed in on Joe Lieberman’s idea of increasing Medicare eligibility from age 65 to 67 (see Frakt, Klein, Volsky, Drum, Krugman). Most of the focus has been on how the delayed eligibility will affect overall health costs. Though federal costs may go down, overall costs would not, because most would just be shifted to seniors themselves. Cost isn’t everything, though. There’s something else delay would do: harm health.

This is not guesswork on our part; there’s clear evidence in the literature. In several papers, Michael McWilliams and colleagues found that utilization, spending, and outcomes for age-eligible Medicare beneficiaries differed for those who had been uninsured prior to turning 65 vs. those who had been insured. Their work was based on survey data, sometimes merged with Medicare claims. This is a relatively strong analytic approach since it exploits a discontinuity in coverage that potentially applies to nearly all individuals: the vast majority of the population enrolls in Medicare at age 65.

The authors found that, relative to those with insurance before age 65, those without insurance prior to Medicare eligibility spent much more money on health care after they became Medicare eligible. In other words, people wait to get care until their Medicare kicks in. This is bad both for health and for the federal government’s bottom line.

Delaying Medicare even longer would likely make this worse. People would forego care longer, health would suffer, and Medicare would pay for the consequences later.

This shouldn’t surprise anyone. It makes sense. It’s hard to get affordable insurance as you approach age 65. If you’re lucky enough to have insurance, then you’re getting the care you need, so getting Medicare is nice, but not a huge change in your life. If you’re uninsured, though, then getting Medicare is a huge change. If you know you need care, and it’s expensive, then you will likely try and wait until the Medicare kicks in to get it. People do this all the time; the evidence above confirms it.

Raising the eligibility age will just force these people to wait longer. If this somehow saved us money, then we suppose you could have a debate about its benefits and harms. Knowing that it will likely cost Medicare more, however, means that it’s entirely possible that delaying Medicare eligibility will cost more and lead to worse outcomes. That’s the worst of both worlds.

Graphs and charts are available online.

References

[1] McWilliams JM, Meara E, Zaslavsky AM, Ayanian JZ. Health of previously uninsured adults after acquiring Medicare coverage. JAMA. 2007;298:2886-94.
[2] McWilliams JM, Meara E, Zaslavsky AM, Ayanian JZ. Use of health services by previously uninsured Medicare beneficiaries. N Engl J Med. 2007;357:143-53.
[3]Page 2 of this document--Kaiser Foundation study on cost shifting effects of raising the Medicare age.

[HockeyMom]

1. AC in 2014

If they are uninsured at this time, these Seniors will have to now go out and buy it themselves. WHO is going to insure them at 65 years old if they don't have a job which has already been insuring them? How much will THAT cost?

My husband has a job and employer insurance ($125 a month), but in FLORIDA it is very, very expensive. We cannot afford to pay an extra $500 a month for him to insure me under his plan, which is the payment right now.

[eridani]

2. With its age rating, ACA sentences people 50-64 to poverty and maybe death

Having to buy shitty Bronze insurance for three times the price will take money from them that could otherwise be spent paying cash to see a doctor. The only benefit they will see is if they incur catastrophic expenses.