In their next major spending bill, President Biden and the Democratic majorities in Congress are proposing to lower Medicare’s age of eligibility to 60. Sen. Bernie Sanders, Vermont independent, endorses the idea and suggests going further: lowering Medicare’s eligibility age to 55.
Likely, this initiative will be widely applauded as a benign step to expand Americans’ health care coverage and improve their quality of care. In truth, the proposal represents the broader Biden-Sanders strategy to destroy, piece by piece, Americans’ employment-based and private health insurance coverage.
It was a strategy hammered out in the Biden-Sanders “Unity Recommendations” during the 2020 presidential campaign. The goal is to increase Washington’s bureaucratic control over the health care dollars and decisions of individuals and families, thus laying the groundwork for a transition to total government control over health insurance.
Let us dispense with the inevitable rationalizations.
First, this proposal is not targeting genuine financial hardship. Discounting assets like home ownership, the target population for this entitlement expansion is much wealthier in terms of annual income than young American families or persons over the age of 65 (mostly on fixed incomes) enrolled in Medicare. In 2019, the Census Bureau reports that Americans’ median household income was $68,703, but for the target population aged 55 to 64, the median was $75,686.
Second, the proposal is not going to significantly reduce the number of America’s uninsured. In a preliminary analysis of the Biden proposal, Avalere, an independent research firm, estimated that it would cover only 1.7 million uninsured.
Beyond tax–free, job-based health coverage, Americans have access to heavily subsidized health insurance exchange plans or, depending on income, Medicaid. Based on a Heritage Foundation analysis of the recent data, 99% of American citizens have access to some form of subsidized health coverage, regardless of their income or their health status.
Cori Ucello of the American Academy of Actuaries and former Medicare trustee Marilyn Moon say: “Lowering the eligibility age would not, however, substantially lower the number of uninsured individuals because older Americans have higher rates of coverage compared with younger adults. Instead, it would mainly shift where they get their coverage.” Exactly.
Consider the incentives. Why should employers continue to provide health coverage for 60-year-old workers and their families when the taxpayers can be forced to pick up the tab? Not surprisingly, Avalere also estimated that of the 23 million persons newly enrolled in Medicare under the Biden proposal, those formerly covered by employer-sponsored insurance would account for 13.4 million and another 3.2 million from individual private plans—73% of the total.
Meanwhile, expect even bigger tax bills. Lowering Medicare eligibility to age 60 would impose a huge cost on taxpayers. As James Capretta, senior fellow at the American Enterprise Institute and former top official at the U.S. Office of Management and Budget (OMB), has reported, Mr. Biden’s initiative, depending upon the details, could incur annual costs ranging between $40 billion and $100 billion. And details matter.
Even more remarkable, Mr. Biden is proposing to increase Medicare’s financial obligations at the very time that the Medicare trustees are warning Congress that the Medicare hospitalization insurance (HI) trust fund faces insolvency in 2026 ; on that date, Medicare will not even be able to pay all its promised hospital benefits to current Medicare beneficiaries.
Meanwhile, Medicare’s supplemental medical insurance (SMI) spending for outpatient, physician, and drug benefits already account for 16 percent of all personal and business income taxes and is on track to consume over 26 percent within the next 20 years.
A rational and responsible policy would reform and stabilize the troubled program, reduce its deficits and debt, rather than expand and worsen its financial condition, and generate even higher deficits and debt. Given the rise in life expectancy while tapping the knowledge skills and experience of older Americans, a more rational policy would increase Medicare’s age of eligibility to at least age 67, tracking the normal retirement age of Social Security.
Mr. Biden’s Medicare expansion comes with big tradeoffs: Millions of Americans dropping—or being dumped—out of their private and employer-based health insurance; bigger taxes and more Medicare cost shifting to the private insurance of younger working families; bigger incentives for early retirement and reduced workforce participation; and a worsening of the growing imbalance between the shrinking number of persons working to finance the growing number of Medicare beneficiaries.
Health policy is not just about care and coverage; it is about power and control. By creating more widespread popular dependence on government and displacing private alternatives for care and coverage, Washington politicians and their agents in the federal bureaucracy increase their power and control.
Ignore the syrupy rhetoric. That is the real agenda.
This piece originally appeared in The Washington Times