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Medicare | ACA/Coverage | FAH Policy Blog Team

New Episode – Dr. Lanhee Chen Explores the Potential Impact of a Medicare at 60 Policy

You’ve likely seen it in the headlines – a plan from President Biden and congressional Democrats called Medicare at 60. The premise sounds simple. Just drop the eligibility age from 65 to 60 and you cover more people and lower health care costs. But as with all impactful health policy – the devil is in the details. This may sound simple, but could actually be one of the largest and most costly overhauls of Medicare in almost two decades. 

In the latest episode of Hospitals In Focus, FAH President and CEO Chip Kahn talks with Dr. Lanhee Chen, one of the authors of a recently released report entitled “The Fiscal Costs of Medicare at 60.” It takes a deep dive into what this plan could mean for current and future Medicare beneficiaries, as well as those on private insurance.

“Let’s just open up Medicare and have more people be able to get on it. That idea actually has significant impacts for the kind of coverage and the nature of coverage arrangements that people who have existing coverage get. And therefore, this notion that if you like your plan, you can keep it – that may not actually be true if this Medicare at 60 program becomes reality. It’s important in policy to consider not just the intended effects, but the unintended effects as well. And that’s really what I’m concerned about,” said Chen, who is Director of Domestic Policy Studies at Stanford University and fellow at the Hoover Institute.

One of the factors highlighted in the report – the exorbitant cost of this major shift in health care policy.

“There are significant fiscal impacts of expanding eligibility to Medicare. And I think one of the questions that I know this is not popular to ask in Washington, but how are you going to pay for this? What are you going to do to offset the cost of this program? So, we find, for example, that the transition to Medicare at 60 would increase the 2022 deficit, our deficit this year by about $30 billion. And we find that in the long run those deficit effects are even more substantial. In fact, what we would see is ten-year deficits rising by about $400 billion over 10 years, and total Medicare spending rising by almost a trillion dollars over 10 years.”

The report also finds that implementing Medicare at 60 is going to accelerate the insolvency of the Medicare Trust Fund – possibly moving it up as early as 2024.

Chen and his co-authors say the only way to avert that disaster would be for Congress to pass a tax hike – with options including raising the additional Medicare tax rate by 285 percent or raising the standard Hospital Insurance (HI) tax rate by up to 12 percent in 2022.   

The report also finds that “Medicare at 60” could negatively affect hospitals and medical providers that are already financially strained by reducing the reimbursement rates they receive. These potentially unsustainable cuts could mean lower quality and less access to care for the current Medicare-eligible population.  

“When you think about our health care system, everything has an interrelationship and you can’t just say, ‘Oh, well, we’re going to take this program and expand it.’ And not expect there to be some impact on some other part of the healthcare system, right?

That’s not reality. That’s not how things work,” Chen said. Adding in conclusion, “We have to be very cautious of policymakers who are selling something that sounds too good to be true.”