It never rains until it rains. Just days after Socialist Senator Bernie Sanders, I-Vermont, convened a hearing on his proposal for a single-payer socialized medicine system, the Congressional Budget Office (CBO) released a report analyzing one of the left’s so-called “moderate” proposals to expand government-run health care: lowering the Medicare eligibility age to 60.
These kinds of “incremental” reforms attempt to move to a single payer via the installment plan, gradually expanding government-run care – and stifling private health insurance – until the only “option” of the government remains. But the CBO report illustrated several ways this proposal would inflict further damage on American health care.
Would accelerate Medicare insolvency
For starters, the plan analyzed by the CBO would formalize Medicare’s insolvency virtually overnight. Like I have previously notedMedicare is already functionally insolvent.
The year before Obamacare was enacted, administrators of the program valued the Medicare Part A Trust Fund would reach insolvency in 2017, five years ago. Only the Obamacare financial scheme, which claimed that the federal government could use the same Medicare savings both to fund Obamacare and expand Medicare solvency, kept the program afloat, but only on paper.
CBO report said the budget office “did not analyze how the policy would affect the financial operations of the Hospital Insurance Trust Fund.” But you don’t have to be a rocket scientist to quantify the effects.
The CBO estimated that “Part A spending would increase by $146 billion” from 2026, when the budget office assumed the policy would take effect, through 2031. A growing roughly $20-30 billion a year, and virtually no new revenue from payroll taxes, the Trust Fund, which had only $134.1 billion on hand from December 2020 – would become insolvent in months instead of years.
The baseline numbers for Medicare expansion don’t look very appealing either. The CBO estimated that lowering the Medicare eligibility age to 60 would increase federal deficits by $155 billion over six years (2026-2031), while reducing the number of uninsured Americans by just 400,000 – not enough to justify such an increase in spending, let alone more turmoil within the health care system.
Lowering the Medicare eligibility age would also create other logistical problems, making implementation more difficult. For starters, lowering the Medicare eligibility age to 60 means that for the first time, people who don’t qualify for Social Security (either disability or retirement benefits) could enter the program. Without Social Security automatically enrolling people in Medicare, they would have to seek out the program, and the federal government would have to use another way to receive premium payments other than by deducting them from Social Security checks.
Additionally, lowering the eligibility age increases the possibility of split coverage within a household. If a parent qualifies for Medicare, but not a spouse or children, families could end up getting insurance coverage from two separate sources.
Another, somewhat surprising, logistical hurdle comes from the effect that lowering the Medicare eligibility age will have on insurance premiums. Progressives have often argued that moving people aged 60 to 64 would create a “win-win” premium scenario: adding people who have lower healthcare costs than “older” seniors will reduce average costs in Medicare, while the withdraw trades lower average premiums for the non-Medicare insurance market.
In its analysis, the budget office contradicts the second part of this theory:
CBO and [the Joint Committee on Taxation]The analysis of suggests that although older enrollees spend more, on average, on health care, their premium payments (including individual premium contributions and any applicable CIPs [premium tax credits, i.e., federal insurance subsidies]) would exceed the claims and administrative expenses of insurers under current legislation. As these older enrollees would leave the out-of-group market under the policy, premiums would increase.
To put it another way: CBO believes that “pre-retirees” who buy exchange coverage before becoming eligible for Medicare are relatively healthy. On average, these people’s health expenses do not exceed their premiums. In fact, they subsidize other less healthy people, so removing those healthy 60-64 year olds would increase the average level of premiums.
This fact shows how trade has become in many states de facto high-risk pools, where only the sickest people or those eligible for the largest subsidies bother to purchase coverage.
Some on the left might argue that the hypothetical scenario analyzed by the CBO does not accurately replicate what an expanded Medicare program might look like. The CBO assumed that existing federal Medicare subsidies for the over-65 population would be extended to the 60-to-64-year-old population, for example, rather than looking at a program in which people aged 60-64 could buy Medicare with their own money.
But this type of “medicare enrollment” would face similar, if not greater, logistical hurdles. For example, would policymakers separate the existing Medicare program from “enrolment” for the population under 65, and how would this be accomplished in an actuarially fair manner? Could the 60-64 year old population use Obamacare exchange grants for the Medicare buy-in program, and if so, how would these grants be calculated and applied?
Engaging in these kinds of tedious logistical exercises for a program that would do next to nothing to increase the number of Americans with health coverage — and at a time when Medicare is already facing insolvency — is more than a simple switch to progressive windmills. It also demonstrates the extent of the obsession of the left to take control of the health system.