It sounds funny, but a huge number like $5.7 billion is actually small. It’s small when it is compared to a much larger number, like $643.4 billion.
Yeah, but what’s the point?
The point is that $5.7 billion is the estimated savings by Medicare in 2014 if 65 and 66 year olds are no longer eligible for the program in that year. The Trustees of Medicare have estimated that the total spending by Medicare in that year will be $643.4 billion. Thus, the savings we might obtain by delaying eligibility until 67 is a mere 0.9% of total program spending. That’s a small number.
As small as it is, it’s even smaller than you might think.
The average annual rate of increase in Medicare spending is project to be 6% this decade. That means that between January 1 and March 1 of 2014, Medicare spending will have gone up more than would be saved if we denied coverage by the program to 65 and 66 year olds.
Saying it differently, we can increase the Medicare eligibility age to 67 in 2014, but what we save will be wiped out by predicted spending increases in the program in under two months.
What, I ask you, do we do on March 1, 2014 when we realize that we still have a massive spending problem? What do we tell the 65 and 66 year olds who have sacrificed so much for so little?
This is not serious savings. $5.7 billion is a tiny, tiny number. Just in case you still don’t believe me, here it is in a pie chart. Blue is $5.7 billion (the “savings”). Red is $643.3 billion (total Medicare spending).