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CBO estimates savings from raising Medicare eligibility age

January 11, 2012

Raising the ages at which people can collect Medicare and Social Security would reduce federal spending and increase federal revenues by inducing some people to work longer, according to an analysis released yesterday by the Congressional Budget Office. The issue brief reviews how ages of eligibility affect beneficiaries under current law and how delaying eligibility would affect beneficiaries, the federal budget and the economy. CBO estimates that increasing the Medicare eligibility age by two months every year- beginning in 2014 for people who were born in 1949, until the age reached 67 in 2027 for people born in 1960 - would reduce Medicare outlays by $148 billion from 2012 through 2021. "By 2035, Medicare's net spending would be about 5% below what it otherwise would be - 4.7% of [gross domestic product] rather than 5.0% under current law," the report estimates. CBO anticipates that most people affected by an increase in the Medicare eligibility age would shift to other forms of health insurance but that there also would be a slight increase in the number of uninsured people.