The hot retirement planning topic of the moment is the Republican proposal to raise the age at which people can participate in Medicare to 67. It's 65 now, a year before Social Security's full retirement age for most people who are currently retiring.
The Kaiser Family Foundation, which studied the issue, says that raising the age of Medicare eligibility to mirror that of Social Security would be expensive for those who have to pick up the bill. If the proposal were to take effect in 2014, Kaiser figures that it would generate $5.7 billion in net federal savings but $11.4 billion in higher health care costs to individuals, employers and states. Kaiser says it would cost people ages 65 and 66 an average of $2,200 more a year in health insurance premiums and other costs now covered by Medicare. Ouch.
The Congressional Budget Office sees it differently. It says raising the eligibility age two years would save the federal government $148 billion between 2012 and 2021.
Is raising the Medicare age likely to happen? In a letter to President Barack Obama earlier this month outlining budget-cutting proposals, Speaker of the House John Boehner suggested raising the Medicare eligibility age gradually -- a milder version of the proposal from other Republicans.
Obama, who was interviewed about the issue by Barbara Walters on ABC Tuesday night, didn't take a strong opposing position. He said:
"When you look at the evidence, it's not clear that it actually saves a lot of money. But what I've said is, 'Let's look at every avenue, because what is true is we need to strengthen Social Security, we need to strengthen Medicare for future generations. The current path is not sustainable because we've got an aging population, and health care costs are shooting up so quickly.'"
It could happen, but I wouldn't spend a lot of time worrying about it -- or stake my retirement nest egg on it. The amount of money to be saved doesn't seem worth the political fallout.