[T]he major problem is with how CBO presents its estimates. It writes:
Director's Blog: Raising the Ages of Eligibility for Medicare and Social Security: If the eligibility age was raised above 65, fewer people would be eligible for Medicare, and outlays for the program would decline relative to those projected under current law. CBO expects that most people affected by the change would obtain health insurance from other sources, primarily employers or other government programs, although some would have no health insurance. Federal spending on those other programs would increase, partially offsetting the Medicare savings. Many of the people who would otherwise have enrolled in Medicare would face higher premiums for health insurance, higher out-of-pocket costs for health care, or both.
CBO estimates that raising the MEA [to 67] would reduce Medicare outlays, net of premiums and other offsetting receipts, by $148 billion from 2012 through 2021…
What is should have written, IMHO:
CBO estimates that raising the MEA [to 67] would reduce net Medicare outlays by $148 billion from 2012 through 2021. It would also reduce tax revenue collections over that time frame by $80 billion as corporations upped their tax-shielded spending on employee health benefits. 65 and 66-year olds and the businesses that employ them would spend an extra $220 billion purchasing Medicare-level health insurance. And 1/4 of 65 and 66-year olds would find themselves uninsured.
Raising the MEA: a really bad idea.
I have a sinking feeling that this one's going to happen. It's backed by all the Republicans and the centrist Democrats and the White house has been eager to sign on. It doesn't have the dedicated funding stream that Social Security has and Democrats won't fight it because the ACA will supposedly make up the difference. Except, of course, it won't, not really. For people over a certain age, the ACA helps mitigate the highest insurances costs, but it's still going to be very, very expensive for people of average to below average means. I have a suspicion that a very large number of the people who fail to buy insurance under the ACA will be in this older age group, and they are among the sickest. Paying the penalty will be far less than their insurance would cost and they'll just try to hang on for two more years until they can get into Medicare --- as they do now. Except they'll be two years older. And sicker.
Here's more from the Incidental Economist on why this is such a destructive, poor idea: