Skip Navigation

Close and don't show again.

Your browser is out of date.

You may not get the full experience here on National Journal.

Please upgrade your browser to any of the following supported browsers:

Raising Medicare Age Would Save $148 Billion, CBO Says Raising Medicare Age Would Save $148 Billion, CBO Says

This ad will end in seconds
Close X

Want access to this content? Learn More »

Forget Your Password?

Don't have an account? Register »

Reveal Navigation



Raising Medicare Age Would Save $148 Billion, CBO Says

The federal government could save $148 billion over 10 years by increasing Medicare eligibility two years to age 67, the Congressional Budget Office reported on Tuesday.

The projected savings are lower than CBO’s March estimate of $162 billion, but the earlier calculation did not include the premiums that seniors must pay into the program. A CBO official said that a senator requested the additional analysis of increasing the Medicare and Social Security eligibility ages.


Either way, the savings may not significantly cut the budget deficit but they could pay for a program such as the “doc fix”--a permanent solution to a temporary pay raise Congress must legislate for Medicare doctors every year.

CBO estimated the effects of increasing Medicare eligibility by two months every year beginning in 2014 for people who were born in 1949 until the Medicare eligibility age reached 67 in 2027 for people born in 1960.

“CBO estimates that raising the Medicare eligibility age, according to the schedule described above, would reduce federal Medicare outlays, net of premiums and other offsetting receipts, by $148 billion from 2012 through 2021,” CBO said.


The report is the agency’s most detailed examination to date of the potential effects of increasing the eligibility age for Social Security and Medicare, lending political cover to lawmakers who want to restrict access to entitlements to save the federal government money. CBO analyses are the gold standard of congressional policy debates.

Although President Obama supports increasing Medicare’s eligibility age, most congressional Democrats oppose the idea.

CBO found that gradually raising the Medicare eligibility age might force some people onto Medicaid; it also might make others continue to use private insurance. That means people would have lower quality care and could end up paying more out-of-pocket than they would on Medicare, CBO said.

But it’s not all bad news. People ages 65 to 67 who have to find private health insurance could have better access to doctors than they would under Medicare, according to the agency.


CBO also concluded that the 2010 health reform law would make increasing the eligibility age “less onerous.”

The savings are more dramatic for Social Security: Raising the program’s full retirement age in two-month increments from 67 to 70 would cut costs by 13 percent, CBO found. (The current Social Security eligibility age for full benefits is still technically 66, but it is scheduled to increase to 67 for people born after 1959.)

Raising the Social Security early eligibility age from 62 to 64, meanwhile, would have a negligible effect on long-term costs. But it would increase monthly benefits.

Such an increase would save the federal government $144 billion through 2021, the report found. Increasing the full retirement age from 66 to 70 for workers born in 1973 or later would save $120 billion over the same time.

Adjusting the programs’ retirement ages would not just result in budgetary savings: CBO predicts that such changes would induce people to work longer, thereby increasing the size of the economy. A three-year bump in the Social Security age, for instance, would result in 1 percent GDP growth, according to the agency’s calculations, while a Medicare age adjustment would have less of an effect.

Increasing the Social Security retirement age has been politically untouchable for Democrats and Republicans in the 112th Congress.

comments powered by Disqus