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Fiscal Cliffnotes: What Are the Trade-offs in Raising Medicare’s Eligibility Age?

(Patrick/Flickr)

(Patrick/Flickr)

It seems seductively easy: people are living longer, so why not raise the Medicare eligibility age from 65 to 67? This kind of entitlement reform is key to Republican strategies to pull the federal government back from the so-called Fiscal Cliff.

The problem is that while raising the Medicare eligibility age looks great in the short run, longterm it could actually cost money.

First, the short run: the non-partisan Kaiser Family Foundation says the federal government would save an estimated $5.7 billion in 2014 if the eligibility age were raised. Using a slightly different analysis, the nonpartisan Congressional Budget Office says savings could total $113 billion over the next decade.

But, those 65 and 66-year-olds are the youngest and presumably healthiest people in the Medicare program — meaning that if they leave Medicare, they would then be the oldest and presumably sickest people in any other insurance pool.

What would happen to those people? Continue reading