Does this make sense?

There appears to be strong Republican pressure building in Washington to raise the Medicare eligibility age from 65 to 67. Some say that this will save the federal government $5.7 billion per year, and that's a good thing. Others see it as a needed "trophy" to keep the Republican base settled down when tax rates on income over $250,000 are raised.

But let's visit the Law of Unintended Consequences for a moment. An easy-to-understand explanation appears in a piece by Austin Frakt published in The Incidental Economist. Here are the numbers:

1) By excluding 66 and 67-year-olds from Medicare, the federal government will save $5.7 billion in 2014.

2) But, those people denied Medicare coverage don't just disappear. They will spend $3.7 billion of their own money to purchase coverage from other sources.

3) Employers will spend an additional $4.5 billion to cover workers who would have been on Medicare if the age remained at 65.

4) Premiums on the new healthcare exchanges will increase because folks at 66 or 67 tend to have higher medical costs than those who are younger.

5) If you are already on Medicare, get ready to kick in! Why? Because--by law--Medicare recipients pay 25% of the cost of the program through their premiums. Excluding the 66 and 67-year-olds from Medicare makes the average age of Medicare recipients increase, and a higher average age means a higher average expense per recipient. Plus, Medicare loses the premiums that these people would have paid. The best estimate of this is a 3% increase in premiums. The monthly Medicare premium is about $100 so a 3% increase would be almost $75/year for a typical retired couple.

6) The combination of 4 & 5 above add up to about $2.5 billion, with the states spending some additional money on 66 and 67-year-olds eligible for Medicaid.

Add everything up and it costs $11.4 billion to save the federal government $5.4 billion. If this sounds like a good deal to you, let's talk about a bridge I own in Brooklyn.

It would be much more effective to talk about allowing Medicare to use its huge weight to bargain with drug manufacturers on price--as the Veterans' Administration is already allowed to do.

Don't hold your breath on that one. Here are some additional interesting numbers:

1) We just went through the most expensive election ever. About $2 billion was spent on TV ads, etc.

2) When Obamacare was being proposed, the insurance and drug companies made it clear that they were willing to spend $10 billion to defeat the bill if it was not to their liking. Just imagine how many 30-second TV ads this would buy, and there would still be plenty of money left over to bribe--excuse me, make campaign contributions to--every politician in Washington.

If you agree with me that this is on the dumb side of stupid, make a call or send an email to your representatives in Washington.