Last week, the Congressional Budget Office released a new study, requested by Sen. Bernie Sanders (I-VT), chairman of the Senate Committee on the Budget, examining the effects of a policy that would lower the age eligibility for Medicare from 65 to 60.
The study was compiled in preparation for looming policy from Congress and President Joe Biden to expand Medicare, aiming to provide more coverage and reduce the nation's healthcare expenditures. In 2021, Biden's fiscal year 2022 budget proposed lowering the age requirement for Medicare to "give people age 60 and older the option to enroll in the Medicare program with the same premiums and benefits as current beneficiaries."
The age for Medicare eligibility is 65 unless a person has collected Social Security Disability Insurance for 24 months or has been diagnosed with Lou Gehrig's disease, also known as ALS, or end-stage renal disease.
Policymakers assume expansion of Medicare would come in 2026, when the Hospital Insurance Trust Fund that provides money for Medicare Part A is projected to become insolvent due to rising health costs and increased unemployment rates. The program has been financed through payroll taxes and taxes on Social Security benefits.
The report was compiled with the assistance of the Joint Committee on Taxation and assumed the policy would go entirely into effect by 2026 and allows people to become eligible for Medicare Part A before Social Security. Current law requires Social Security eligibility in conjunction with Part A.
"One striking feature of this report is the impact on the Hospital Insurance Trust Fund. The CBO estimates that Medicare Part A would see the newest beneficiaries added, about 13.5 million in 2031," said Darren Webb, health policy consultant. "According to this report, implementation is projected to occur in 2026, the same year the most recent trustees report estimates the HI Trust Fund becomes insolvent."
"This policy adds $146 billion in cost to the Part A trust fund between 2026 and 2031. By 2030, the trustees report estimates HI will be $335 billion in the red. No one knows what happens when the trust fund is no longer able to cover its expenses, but generally, experts either expect across-the-board cuts or delayed payments. Adding over 40% to this figure can only make a bad situation worse," he said. "In fact, the administration was obligated to provide Congress with a plan to address the trust fund issue after releasing its budget request but has failed to do so. This is an issue congressional Republicans have brought up in multiple hearings in recent weeks."
The CBO and JCT estimate an increase in federal spending by $221.8 billion over five years (2026-2031), with $154.9 billion in federal expenditures in new deficit spending and $66.9 billion offset through savings in the federal budget. Meanwhile, $54 billion in revenue would come from increased wages no longer exposed to the employment-based coverage tax exclusion, and $14 billion would be from decreased premium tax credits provided through Obamacare.
The CBO estimated that 19.8 million people will be between the ages of 60 and 64 in 2031. Of those people, 2.6 million would be eligible under current law. The other nearly 15 million would be eligible due to residency and work history requirements, but an estimated 13.6 million would enroll in some form of Medicare. More specifically, 7.3 million would enroll in Medicare Part A and Part B as their primary source of coverage, 900,000 would enroll in Part A and Part B as secondary coverage, 4.8 million would enroll in Part A in addition to their current coverage plans, and 500,000 would enroll in Part A only.
"The CBO estimates that within the newly eligible group, 1.3 million Americans are currently uninsured and that 70% (910,000) of these would enroll in Medicare Parts A and B. However, CBO only estimates the uninsured rate would decrease by only 400,000," Webb added. "This is because CBO estimates that a number of individuals currently with insurance would lose coverage and become uninsured or only be covered under Medicare Part A, which, because by its nature, is not comprehensive coverage but typically does not include a premium. CBO counts Part A only beneficiaries as effectively uninsured."
Those newly eligible for Medicare coverage would include 8.2 million people with employment-based coverage and 2.3 million Medicaid enrollees.
While the report focused on coverage capabilities and costs for the federal government, it failed to address the out-of-pocket costs, especially with recent claims that such expansion would make health coverage more affordable. A recent study by Lisa Grabert suggested that Medicare should make changes to its "compare coverage options" tool to increase public understanding of trade-offs between various Medicare-based programs. By providing information on costs and coverage, people become better equipped to make health decisions that fit their needs.
Webb also highlighted the concern about expansion, saying the policy change seems to miss the intended goal.
"CBO estimates that overall health coverage would be extended to an additional 400,000 by 2031. However, this is at a cost of $75,000 in 2031 ($6,250 per month) in deficit spending per newly covered individual," he said. "If the goal is to decrease the number of uninsured in America, it's remarkably inefficient."
With new fiscal analysis from the CBO and JCT allowing policymakers to see the impacts of changes to the 2023 budget, it's likely that Congress will take steps to expand the program.