The reason: hiking the Medicare eligibility age would throw seniors aged 65 and 66 off Medicare and into the private market, forcing insurers, who will soon be required to cover all consumers regardless of health status, to care for a sicker, more expensive crop of patients.
"The risk pool issue is important," the insurance industry source said. "[I]f you add more older and sicker people to the pool, that's definitely going to have an impact on premiums."
The policy would save the federal government $113 billion over a decade, according to the Congressional Budget Office. But it achieves that by raising the cost of private insurance: the Kaiser Family Foundation projected that a Medicare age of 67 would raise costs for under-65 patients by an average of $141 in 2014. (In practice it would be phased in.)
Starting in 2014, the Affordable Care Act will forbid insurers from turning people away or charging them different prices on the basis of age or health status. So for the first time in about half a century, they'd be chiefly responsible for patients aged 65 and 66. The specter of rising costs worries insurers, who see the ongoing spiral as an existential threat to their industry.
The age hike would have other ripple effects. Businesses that provide insurance would have to pay for two more years of coverage for elderly employees when their medical expenses tend to be highest. The higher overall costs would be borne by individuals who purchase insurance on the exchanges as well as employers who provide it.
In short, raising the Medicare age would save the government money by shifting costs to the less efficient private market -- that is, businesses and consumers who buy coverage and the insurers who would have to provide it. And they won't necessarily take that reform lying down.