It never rains that it doesn’t pour. Mere days after socialist Sen. Bernie Sanders, I-Vermont, convened a hearing on his proposal for a single-payer system of socialized medicine, the Congressional Budget Office (CBO) issued a report analyzing one of the left’s supposedly “moderate” proposals to expand government-run health care: Lowering the age of Medicare eligibility to 60.
These types of “incremental” reforms attempt to achieve a move to single payer via the installment plan, gradually expanding government-run care—and choking out private health insurance—until only the government “option” remains. But the CBO report illustrated several ways in which this proposal would inflict further harm on American health care.
Would Accelerate Medicare’s Insolvency
For starters, the plan CBO analyzed would formalize Medicare’s insolvency virtually overnight. As I have previously noted, Medicare is already functionally insolvent.
The year before Obamacare’s enactment, the program’s trustees estimated the Medicare Part A Trust Fund would reach insolvency in 2017—five years ago. Only the financial gimmickry of Obamacare, which claimed that the federal government could use the same Medicare savings both to fund Obamacare and to extend Medicare’s solvency, has kept the program afloat—but only on paper.
The CBO report said that the budget office “has not analyzed 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 effects.
CBO estimated that “outlays for Part A would increase by $146 billion” from 2026, the date the budget office assumed the policy would take effect, through 2031. With Part A spending rising by roughly $20-30 billion per year, and virtually no new payroll tax revenue coming in, the Trust Fund—which had only $134.1 billion on hand as of December 2020—would become insolvent within months instead of years.
The bottom-line numbers for the expansion of Medicare look none too appealing, either. 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 a mere 400,000—not nearly enough to warrant such an increase in spending, let alone more turmoil within the health care system.
Lowering the Medicare eligibility age would also create other logistical issues, making implementation more difficult. For starters, lowering the Medicare eligibility age to 60 means that for the first time, people who do not 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 a spouse or children do not, families could end up getting insurance coverage from two separate sources.
Another, somewhat surprising, logistical obstacle comes from the effect that lowering the Medicare eligibility age will have on insurance premiums. Progressives have often claimed that shifting people in the age 60-64 would create a “win-win” premium scenario: Adding people who have lower health costs than “older” seniors will reduce average costs in Medicare, while removing them from the exchanges will lower average premiums for the non-Medicare insurance market.
In its analysis, the budget office contradicts the second prong of this theory:
CBO and [the Joint Committee on Taxation]’s analysis suggests that even though older enrollees spend more, on average, on health care, their premium payments (including individual premium contributions and any applicable PTCs [premium tax credits, i.e., federal insurance subsidies]) would exceed insurers’ claims and administrative spending under current law. Since those older enrollees would leave the nongroup market under the policy, premiums would increase.
To put it another way: CBO believes that the “pre-retirees” buying exchange coverage before they become eligible for Medicare are relatively healthy. On average, these individuals’ health costs do not exceed their premiums—in fact, they are subsidizing other, less healthy individuals, such that removing these healthy 60-64-year-olds would raise average premium levels.
This fact demonstrates the extent to which the exchanges have in many states become de facto high-risk pools, where only the sickest individuals, or the individuals who qualify for the biggest subsidies, bother to sign up for coverage.
Some on the left might claim that the hypothetical scenario CBO analyzed doesn’t properly replicate what an expanded Medicare program might look like. CBO assumed that existing federal Medicare subsidies for the over-65 population would get extended to the 60-64 population, for instance, rather than examining a program in which those aged 60-64 could buy into Medicare with their own money.
But that type of “Medicare buy-in” would face similar, if not greater, logistical obstacles. For instance, would policy-makers separate the existing Medicare program from the “buy-in” for the under-65 population—and how would that get accomplished in an actuarially fair manner? Could the 60-64 population use Obamacare exchange subsidies for the Medicare “buy-in” program, and if so, how would those subsidies get calculated and applied?
Engaging in these types of cumbersome logistical exercises for a program that would do practically nothing to increase the number of Americans with health coverage—and at a time Medicare already faces insolvency—represents more than just tilting at progressive windmills. It also demonstrates the extent of the left’s obsession with taking control of the health care system.