Budgetary Effects of a Policy That Would Lower the Age of Eligibility for Medicare to 60

In this report, the Congressional Budget Office discusses an estimate of the federal budgetary costs of a policy that would lower the age of eligibility for Medicare, largely reflecting current program rules for people who would be newly eligible. The estimate was prepared in conjunction with the staff of the Joint Committee on Taxation (JCT). This report also describes the resulting changes in the number of people with health insurance coverage and the sources of that coverage.

CBO and JCT estimate that lowering the age of Medicare eligibility to 60 would increase federal budget deficits by $155 billion over the 2026–2031 period through the effects of that policy on federal revenues and mandatory spending.

Enacting the policy would have a significant effect on primary sources of health insurance coverage, and it would increase the number of people insured. According to CBO’s estimate, in 2031:

• About 7.3 million more people would be enrolled in both Medicare Part A and Medicare Part B as their primary source of coverage.
• About 3.2 million fewer people would have employment-based insurance as their primary source of coverage; most of those people would enroll in Medicare.
• About 1.8 million fewer people would have Medicaid as their primary source of coverage; almost all of them would enroll in Medicare.
• About 2.0 million fewer people would be enrolled in nongroup coverage, and almost all of them would enroll in Medicare instead.
• About 0.4 million fewer people would be without health insurance.

Those changes in health insurance coverage under the policy would cause federal deficits to increase for three main reasons:

• Although spending on health care would decrease, on average, for people with employment-based coverage under current law (largely because Medicare generally has lower payment rates for medical services), federal costs would increase because a larger share of that spending would be paid by the federal government rather than employers.
• Some people who are projected to be uninsured or enrolled in unsubsidized nongroup coverage under current law would instead have health insurance coverage subsidized by the federal government.
• Federal costs for people with Medicaid coverage under current law would increase, primarily because of greater spending on health care for people dually eligible for Medicaid and Medicare and because a greater share of those costs would be paid for by the federal government rather than state governments. Those costs would be partially offset by reductions in Medicaid spending for people who would lose their eligibility for Medicaid under the policy.