President Joe Biden wants to lower Medicare’s eligibility age from 65 to 60. Now Sen. Bernie Sanders is intent on doing him one better. The Vermont socialist, the country’s leading promoter of single-payer health care, is pushing Democrats to open up Medicare to Americans as young as 55.
“There are many millions of seniors who would be very, very grateful if we did that right now,” Sanders recently said. That doesn’t make it a good idea. Not only is it unnecessary, given that older adults are more likely to have insurance than any other age group. Lowering Medicare’s eligibility age would also put more financial stress on the entitlement, which is dangerously close to insolvency.
In 2020, the program’s trustees projected that Medicare Part A, which covers hospital care, would run out of cash in 2026. Covid-19 has only accelerated this march to insolvency. Because of the surge in joblessness that followed pandemic-related lockdowns, the number of people paying into Medicare’s trust fund through payroll taxes dropped last year. As a result, that trust fund is now expected to be depleted in just three years, according to a September 2020 CBO report.
Avoiding this bleak future will require immediate, aggressive action to reduce Medicare’s costs. According to the Medicare Payment Advisory Commission, a non-partisan congressional agency, if Medicare Part A is to remain solvent for the next 25 years, lawmakers will need to cut spending by 17%.
Sanders’s proposal does just the opposite. By lowering the eligibility age to 55, it would add more than 42 million patients to the program’s rolls. It also makes Medicare benefits more generous, and thus more expensive, by adding dental and vision coverage.
Older adults generally don’t need a government hand. People between the ages of 55 and 64 are less likely to be uninsured than any other age group, aside from those over the age of 65, who are already covered by Medicare. Lowering Medicare’s eligibility age would result in millions of people exiting private coverage and picking up new public coverage at taxpayer expense.
The cost of expanding Medicare would be enormous. Consider Biden’s comparatively modest plan to lower the eligibility age to 60, which would add about 23 million people to the program. It would cost as much as $100 billion a year, according to an analysis by Harvard Medical School’s Zirui Song. Making those 55 and up eligible would be even more expensive.
A lower eligibility age would also create new challenges for doctors and hospitals. Medicare underpays providers significantly, reimbursing hospitals just 87 cents for every dollar of care they deliver.
These paltry reimbursement rates stress the finances of providers—and result in higher premiums for the privately insured, who are charged more to make up for the public program’s underpayment. If Medicare enrollment were to balloon by two-thirds—as it likely would under Sanders’ proposal—providers would see their revenues plummet even further. That could lead to yet higher private insurance premiums—or force some providers to close up shop.
It’s no surprise, then, that a similar proposal to lower Medicare eligibility to 50 back in 2019 was met with fierce opposition from the hospital sector. As the head of the Federation of American Hospitals, Chip Kahn, wrote about that bill, “Expanding the program with hospitals facing the lowest Medicare margins in history will make it more difficult to provide the critical care that all Americans expect and deserve.”
This isn’t the only way in which expanding eligibility for Medicare would undermine the quality of American health care. Sanders wants to pay for it by allowing Medicare to negotiate drug prices directly with the pharmaceutical industry.
In effect, he wants to import the kinds of price controls on prescription drugs that have impeded access to state-of-the-art medicines abroad for years. One of the main causes of the latest wave of Covid-19 infections sweeping across Europe is that the continent’s leaders insisted on negotiating lower prices for coronavirus vaccines. Such haggling ended up delaying access to these crucial shots.
Add it all up, and Sanders wants to use one disastrous brand of healthcare reform to pay for another. He’s likely hoping that expanding Medicare will nudge America down the road to single-payer. If he gets his wish, Americans of all ages will soon be struggling to find quality, affordable care.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.
Sanders Proposal Brings Medicare Closer To The Brink Of Collapse
Sally C. Pipes
President Joe Biden wants to lower Medicare’s eligibility age from 65 to 60. Now Sen. Bernie Sanders is intent on doing him one better. The Vermont socialist, the country’s leading promoter of single-payer health care, is pushing Democrats to open up Medicare to Americans as young as 55.
“There are many millions of seniors who would be very, very grateful if we did that right now,” Sanders recently said. That doesn’t make it a good idea. Not only is it unnecessary, given that older adults are more likely to have insurance than any other age group. Lowering Medicare’s eligibility age would also put more financial stress on the entitlement, which is dangerously close to insolvency.
In 2020, the program’s trustees projected that Medicare Part A, which covers hospital care, would run out of cash in 2026. Covid-19 has only accelerated this march to insolvency. Because of the surge in joblessness that followed pandemic-related lockdowns, the number of people paying into Medicare’s trust fund through payroll taxes dropped last year. As a result, that trust fund is now expected to be depleted in just three years, according to a September 2020 CBO report.
Avoiding this bleak future will require immediate, aggressive action to reduce Medicare’s costs. According to the Medicare Payment Advisory Commission, a non-partisan congressional agency, if Medicare Part A is to remain solvent for the next 25 years, lawmakers will need to cut spending by 17%.
Sanders’s proposal does just the opposite. By lowering the eligibility age to 55, it would add more than 42 million patients to the program’s rolls. It also makes Medicare benefits more generous, and thus more expensive, by adding dental and vision coverage.
Older adults generally don’t need a government hand. People between the ages of 55 and 64 are less likely to be uninsured than any other age group, aside from those over the age of 65, who are already covered by Medicare. Lowering Medicare’s eligibility age would result in millions of people exiting private coverage and picking up new public coverage at taxpayer expense.
The cost of expanding Medicare would be enormous. Consider Biden’s comparatively modest plan to lower the eligibility age to 60, which would add about 23 million people to the program. It would cost as much as $100 billion a year, according to an analysis by Harvard Medical School’s Zirui Song. Making those 55 and up eligible would be even more expensive.
A lower eligibility age would also create new challenges for doctors and hospitals. Medicare underpays providers significantly, reimbursing hospitals just 87 cents for every dollar of care they deliver.
These paltry reimbursement rates stress the finances of providers—and result in higher premiums for the privately insured, who are charged more to make up for the public program’s underpayment. If Medicare enrollment were to balloon by two-thirds—as it likely would under Sanders’ proposal—providers would see their revenues plummet even further. That could lead to yet higher private insurance premiums—or force some providers to close up shop.
It’s no surprise, then, that a similar proposal to lower Medicare eligibility to 50 back in 2019 was met with fierce opposition from the hospital sector. As the head of the Federation of American Hospitals, Chip Kahn, wrote about that bill, “Expanding the program with hospitals facing the lowest Medicare margins in history will make it more difficult to provide the critical care that all Americans expect and deserve.”
This isn’t the only way in which expanding eligibility for Medicare would undermine the quality of American health care. Sanders wants to pay for it by allowing Medicare to negotiate drug prices directly with the pharmaceutical industry.
In effect, he wants to import the kinds of price controls on prescription drugs that have impeded access to state-of-the-art medicines abroad for years. One of the main causes of the latest wave of Covid-19 infections sweeping across Europe is that the continent’s leaders insisted on negotiating lower prices for coronavirus vaccines. Such haggling ended up delaying access to these crucial shots.
Add it all up, and Sanders wants to use one disastrous brand of healthcare reform to pay for another. He’s likely hoping that expanding Medicare will nudge America down the road to single-payer. If he gets his wish, Americans of all ages will soon be struggling to find quality, affordable care.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.