Yes, you read that correctly. The Business Roundtable, the Washington lobbying powerhouse whose companies together employ 16 million workers, is suggesting raising the age at which people can get Medicare and full Social Security benefits to 70. (The change wouldn’t affect people who are 55 or older today.) The reasoning: Americans are living longer and the costs of Social Security and Medicare benefits are growing faster than the tax revenue that pays for them.
Raising the Medicare age to 70, from today’s 65, would keep the oldest workers, who generally have the greatest health costs, on private insurance for an additional five years. The shift would hit states that cover more low-income seniors through Medicaid, and it would raise premiums for younger people who buy health insurance through state exchanges, as more people with higher health costs enter the risk pool.
This would save Medicare money—a good thing for taxpayers. But it would effectively increase health costs for the country overall, including employers. “For many seniors, their costs will go up. For employers in the aggregate, their costs will go up,” says Juliette Cubanski, associate director for Medicare policy at the nonprofit Kaiser Family Foundation. That’s because Medicare pays doctors less for their services than private insurers do.
The specifics of the Business Roundtable plan (which also includes partially privatizing Medicare) haven’t been modeled, but in 2011, Cubanski looked at proposals to raise the Medicare age to just 67. The analysis Cubanski co-wrote (PDF) suggests such a change would save the federal government $5.7 billion in 2014. It would add $3.7 billion in out-of-pocket costs for people aged 65 and 66, who otherwise would have been covered by Medicare. It would further cost states $700 million and employers $4.5 billion.
The 210 members of the Business Roundtable understand these costs, says spokeswoman Amanda DeBard in an e-mail. “But we believe that changing the age of eligibility for entitlement programs over an appropriate period of time to allow planning is both fiscally responsible and an appropriate recognition of our changing workforce.”
Workers might not relish spending those extra years on the job to keep their health insurance. But it’s the cost of living longer, as Gary Loveman, Business Roundtable member and chief executive officer of Caesars Entertainment (CZR), illustrated with a personal anecdote at a press conference:
“My father, who was an employee of AT&T (T) for more than 40 years, retired at age 61 and lived to be 95. He was a 34-year recipient of Social Security benefits—something that near his death, he noted to me with great pride that he had been on both [AT&T's] payroll and the federal government’s payroll for much longer than anyone could possibly have anticipated. That’s, of course, generally speaking, good news,” Loveman said. “But it’s a problem the country simply can’t afford over a sustained period of time.”