Ruth Marcus: The eligibility age conundrum

BY RUTH MARCUS Published: December 8, 2012

Of course, that full Medicaid cost might not materialize if states choose not to participate in the Medicaid expansion, as the Supreme Court has allowed. But then you'd have some poor seniors — by the way, those likely to be in the worst health — left uninsured.

Paradoxically, with the higher eligibility age, the federal government would spend less money, but overall national spending on health care would rise because Medicare costs are lower than those of private insurers.

Meanwhile, with the youngest seniors out of the Medicare system, Kaiser estimated, premiums for the remaining seniors would increase by 3 percent because that population becomes older and sicker. Likewise, premiums on the health care exchanges would increase by 3 percent, as the average age of enrollees (and therefore the average cost) rises. The risk pools get messed up in both directions.

And many of the newly ineligible seniors, the CBO said, would pay higher premiums or spend more out of pocket. This is not a problem for better-off seniors who'd simply turn to their employers or their retiree health plans; indeed, it would make them more conscious of costs.

But consider the 65-year-old who makes $46,000 a year — too much to qualify for federal insurance subsidies — and whose exchange premiums could reach $12,000. How is this affordable?

Raising the eligibility age would make sense if the neediest seniors are protected. The University of Pennsylvania's Ezekiel Emanuel has intriguingly proposed tying age limits in Social Security and Medicare to lifetime earnings: the richer you are, the longer you wait to collect benefits.

The lesson of health care reform is that every tweak to this complex mechanism has far-reaching, often unintended, consequences. Raising the eligibility age is worth debating, but not without considering the ripple effects of this seemingly simple change.