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Raising Age of Medicare Eligibility Likely To Increase Total Health Care Spending
While the government could save money by raising the age of Medicare eligibility from 65 years to 67 years, total spending on health care may actually increase, according to a recent article in Health Affairs.
Using data on the costs of imaging procedures, investigators evaluated changes in health care spending for individuals who switched to Medicare from private insurance upon turning 65 years of age. Spending per person fell by about one-third once patients switched—a possible reflection of Medicare’s ability to negotiate lower prices for services. The results suggest that increasing the age of Medicare eligibility may actually delay these heath care savings and, thus, contribute to a net increase in national health care spending.
“What this study shows, pretty clearly, is that while the government may save money by increasing Medicare eligibility to 67, overall national health care spending will go up,” Jacob Wallace, a doctoral candidate in health policy at Harvard University, Cambridge, MA, and the study’s lead author, told Kaiser Health News.
The decreased spending observed was not due to a change in utilization of services; in fact, no changes in the volume of services were found. Instead, once beneficiaries enrolled in Medicare, they paid on average $38.56 per quarter less for the same level of services.
“Medicare is able to pay physicians 30% less than other payers, without leading to a reduction in access,” Wallace told Kaiser Health News.
The findings are similar to those of a previous analysis by the Kaiser Family Foundation that showed raising Medicare eligibility to 67 years of age would have saved the federal government $5.7 billion in 2014 but also would increase patient out-of-pocket costs by $3.7 billion and employer retiree health care costs by $4.5 billion.
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