Analysis: Lowering Medicare Eligibility Age from 65 to 60
- Written by Rachel Christian
Financial Writer and Certified Educator in Personal Finance
Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.Read More
- Published: February 16, 2021
- 3 min read time
- This page features 5 Cited Research Articles
On the campaign trail, President Joe Biden had called for lowering the Medicare eligibility age from 65 to 60.
According to experts, Biden’s Medicare at age 60 proposal could help millions of older Americans, especially those who have lost their jobs and employer health insurance during the COVID-19 pandemic.
A March 2020 report by the National Academy of Social Insurance estimated that 18 million people would become newly eligible for Medicare under this expansion, and about 6 million of them would be likely to use Medicare as the primary payer.
Benefits of Medicare Eligibility at 60
Medicare’s cost per person could fall as a younger cohort — some with lower health care costs — sign up. Some experts believe current Medicare users could benefit, too, as premiums may decline with more people paying in.
For older uninsured people, Medicare premiums may be cheaper than Affordable Care Act plans. Medicare also provides broader coverage.
Adults over 50 who do not have health insurance, especially people with chronic conditions like cardiovascular disease and diabetes, are often in poorer health and require more expensive care by the time they age into the system than users who were insured before entering Medicare.
And for low income people who qualify, Medicare works with state Medicaid agencies to offer savings programs that cover premiums, deductibles and copays. This could help residents in the 12 states that refused Medicaid expansion under the ACA.
Medicare has no requirement for profit, and it can exert market power to set payment rates for doctors and hospitals.
Some have argued that providers will receive less money if the eligibility rate is lowered. After all, Medicare pays lower reimbursement rates than private health insurance.
However, those who transition from Medicaid or no insurance at all would bring higher prices.
An expansion would save employers money, too, by removing the highest-spending group of people with workplace coverage from the employer pool.
The federal government could gain much more money from tax revenues by granting fewer tax breaks for employer health care coverage as some people forego that insurance for Medicare.
How Would a Medicare Expansion Work?
The program already exists, so it would be relatively easy to scale an expansion. And research shows Americans largely support the idea.
According to a 2019 Kaiser Family Foundation poll, 77 percent of people support allowing adults ages 50 to 64 to purchase health insurance through Medicare.
Still, important questions remain about how the roll out may actually work.
Even this relatively simple plan demands numerous policy considerations from Congress. For example, how much would payroll taxes need to rise to help pay for expanded benefits? Would the source of financing need to change?
The Harvard Medical School estimates that such a policy could increase Medicare spending by about $40 billion to as high as $100 billion a year.
While experts still consider this “a somewhat modest cost” to insure a substantial part of the population, new funding would likely spark heated debate among members of Congress.
The government would also need to consider putting an out-of-pocket cap on Original Medicare to protect users from financial risk and make the program more competitive with private Medicare Advantage plans.
Finally, Medicare’s administrative infrastructure would need a healthy boost to effectively educate and enroll millions of new beneficiaries.