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Increasing Medicare Eligibility Age and the Law of Unintended Consequences

November 8, 2011

On my way to the annual two-day blowout health law seminar put on by Massachusetts Continuing Legal Education (MCLE) on Monday — I was second in the lineup, speaking about post-acute care and some of the innovations in that arena for dual eligibles, among other things — I heard a fascinating piece on NPR on one of the ideas floating around the supercommittee charged with cutting $1.2 trillion from the federal budget.  The idea: increase the minimum age for Medicare eligibility from 65 to 67, and save a bundle for Medicare in the process.

The problem with this deceptively simple idea (Social Security eligibility is migrating from 65 to 67, too, so it seems to be a sensible idea on its face), is that while it would save the federales about $6 billion, net, in 2014, it would cost purchasers of non-Medicare coverage (employers and individuals) about $8 billion, net.  Why?  The 65 and 66 year olds are the spring chickens of Medicare — they actually bring Medicare average costs down, because they're healthier than the Medicare population as a whole. However, when compared to the working population, they are the older, sicker cohort, so they would drive costs up if insured in the commercial market.

Monday's post in this space was on the 2012 MPFS (Medicare Physician Fee Schedule) and the continuing Sustainable Growth Rate (SGR) debacle, and it prompted an email from a reader pointing to a predictable but ultimately unsympathetic plea to please not cut THAT program, because it's Important.

They're ALL important, folks.  

The cold, hard truth is that we need to figure out how to do more with less — in every program, for every worthy cause.  We need to learn how to work collaboratively, tear down the silos, and activate every other cliche in the book.  Collaborative thinking, inspired by changes in the economic drivers — i.e., reimbursement models — that have led to more siloed thinking in the past, is hard to do, but actors in the health care economy need to get better at it – and fast.

The Bundled Payment Initiative, ACOs and sons of ACOs, the Medicare-Medicaid Coordination Office, and more innovations coming out of CMS, driven by the ACA, are all encouraging developments, pushing providers in the direction of collaboration, and while we may have to deal with some unintended consequences a long the way, these are some important experiments that must be conducted.  And the people are with Washington on this one: An RWJF/Harvard School of Public Health survey released this week found that most folks want the federales to grow their role in the health care system.  Not what we might have expected, but an encouraging sign that folks understand that the problem before us is a big one, requiring significant resources in working towards solutions.

David Harlow 
The Harlow Group LLC
Health Care Law and Consulting
 

 

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Filed Under: Accountable Care Organization, CMS, Health care policy, Health Law, Health Reform, Medicare, Physicians

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Comments

  1. Marc Cantor says

    November 9, 2011 at 11:41 am

    I agree that we need to figure out how to do more with less, to increase efficiencies, and more equitably share the burden. What I missed from that npr report was an analysis as to how great the increased/or decreased financial burden is to each affected population. For example, that $2B difference may be more easily absorbed by non-Medicaid workers, as opposed to fixed income retirees.

  2. David Harlow says

    November 9, 2011 at 12:58 pm

    Equity and affordability are not the same thing. for example, Warren Buffet’s request for a “millionaire’s” tax is not necessarily equitable, but it improves affordability of government services all around.

    For a health care-specific look at this question, consider the following: the average Medicare beneficiary uses $2 to $6 of health care benefits for every $1 they put into the pot through payroll taxes. Only high-end earners pay in as much as they ultimately take out in Medicare spending. See Is Medicare a Ponzi Scheme? — The American Magazine – http://vsb.li/3fwqYp — and beware the leanings of the source.

    More specifically to your point: we’re not talking just about out-of pocket costs to individuals. The bulk of the expense is paid either by employers (health insurance premiums) or absorbed by the Federal government (Medicare budget). Thus, the cost-shifting out of Medicare would be experienced, effectively, as a tax hike.

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