Actuaries: PPACA Could Help with Increasing Medicare Eligibility Age

By ALLISON BELL

Published 5/31/2011 

Affordable Care Act health insurance access requirements could make pushing back the normal Medicare enrollment age easier to implement.

Cori Uccello and Thomas Wildsmith, representatives from the American Academy of Actuaries (AAA), Washington, presented that suggestion Friday during a briefing in a U.S. House office building.

The actuaries went to Capitol Hill to help members of Congress and their aides understand how actuaries see the 2011 report prepared by the trustees of the Medicare trust funds.

The trustees now are predicting that the Medicare Part A hospitalization trust fund will be empty in 2024 – 5 years earlier than the trustees had projected in 2010.

In 2024, hospitalization fund tax revenues will cover about 90% of the benefits promised.

Policymakers could address that shortfall by taking steps such as putting limits on growth in Medicare spending, shifting to a voucher program, changing provider reimbursement rates, revising the program benefit design or raising the Medicare eligibility age from 65 to 67 or some other age, the trustees said, according to a written version of their remarks.

Traditionally, one objection to the idea of increasing the Medicare eligibility age is the reality that, in states that allow medical underwriting, people ages 55 and older often have a difficult time buying private health insurance. The difficulty could be even greater for peoples ages 65 to 67.

But the Affordable Care Act – the federal legislative package that includes the Patient Protection and Affordable Care Act of 2010 (PPACA) – is supposed to ban use of most health information in underwriting individual and small group health insurance starting in 2014, and the government also is supposed to create a new system of tax credit subsidies to help low-income and moderate-income people buy health coverage.

Health insurers could charge older people higher premiums, but the price for the oldest insureds could only be 4 times as high as the price for the youngest insureds.

In part because of PPACA, increasing the Medicare eligibility age could increase federal spending in other areas, such as on premium subsidies, but the PPACA provisions would increase the ability of older people to buy coverage, Uccello and Wildsmith said.

In related news, two other AAA representatives – Janet Barr and Stephen Gross – went to Capitol Hill to give a briefing on actuaries’ thoughts on the 2011 Social Security Trustees Report.

Trustees’ projections show the main Social Security trust fund will be empty in 2036.

“Now is the time to act,” Barr and Gross told participants in that briefing, according to a written version of the briefing.

If members of Congress address the trust fund problems today, they can fill the gap by increasing the payroll tax rate to 14.55% of affected wages, from 12.4%, or cutting benefits 13.8%, the actuaries said.

If Congress waits until 2036, the lawmakers of the future will have to increase the tax rate to 16.45%, from 12.4%, or cut benefits 23%, if current projections prove to be correct, the actuaries said.Affordable Care Act health insurance access requirements could make pushing back the normal Medicare enrollment age easier to implement.