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Why Young Latinos Should Care About Medicare

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Latinos are a young population, and it's very easy for young people to label issues like Social Security, pensions and Medicare as seniors' issues and ignore them. Never mind that Social Security is America's largest anti-poverty program for children and that excessive 401(k) fees, while having a minimal impact on current seniors, will have a huge impact on younger workers who face the full compounded effect.

But young Latinos would especially be wise not to dismiss and ignore the current Medicare debate as merely a seniors' issue. A report released last week entitled "The High Cost to Latinos of Raising the Medicare Age" shows why. Medicare brings down overall healthcare costs, not just for seniors, but for young people. This is because Medicare covers people at a significant lower cost than the private market. While raising the Medicare eligibility age will save Medicare $5.7 billion a year, it does so by creating an additional cost of $11.4 billion to be paid for by seniors, employers, states, and yes, young people. Overall, $2.4 billion of these additional costs would be taken directly from the pockets of Latinos, with most of costs falling on younger Latinos.

It's no secret that young people are healthier and have lower healthcare expenses than older people. If you kick out everyone 65 and 66 from Medicare, they will still need to get insurance somewhere. Most will enter the health insurance exchanges, and compounded by the law that limits insurers' ability to charge more based on age, will drive up the costs for everyone in the exchanges. According to a Kaiser Family Foundation report, the effect will be to raise premiums in the exchange by an average of $141 dollars a year. Yes, this means that if you're of working age and get your health insurance through the exchange, you will have to pay an average $141 dollars a year if the Medicare age is raised. From the age of 20 to 65, that could add up to $6,000 in additional costs before you qualify for Medicare at today's eligibility age.

But to make matters worse for young people, the $141 is increase is the average for everyone between the ages of 20 and 65. The increased expenses are larger the younger you are. For example, those in their 20's would see their premiums rise by 8%, or $376 a year! Those in their lower 30's, like me, would see their premiums rise by 5%, or $235 a year. I don't know about you, but I can think of plenty of things I would rather spend $235 dollars on!

If you are lucky enough to get healthcare from your employer, you might be hoping this won't affect you. Unfortunately though, Latinos are the least likely of any group to get healthcare coverage from their employer. Only 40% of working Latinos get health coverage from their employers, and many people expect that the number of employers providing healthcare coverage to decline in the coming years as the healthcare exchanges get up and running. If employers are forced to cover an even older population it will cost them an extra $4.5 billion a year, which will almost certainly cause more employers will drop their coverage or increase the burden on their employees through cost sharing measures.

While those 65 and 66 have much higher healthcare costs than those in their 20's and 30's, there is one group they are much cheaper to insure - those 67 and older! Medicare would lose its youngest and healthiest enrollees, which would drive up premiums for the older seniors still in Medicare by $46 a year. This may not seem like a lot to compared to the increase for younger people, but remember most seniors 67 and older are living on very modest fixed incomes. Latina seniors' average age-old Social Security benefit is only about $9,500 a year, and more than half of them rely on this as their only source of income. Furthermore, because of longer life expectancies the increased costs could ultimately once again fall disproportionately on Latinos.

Fortunately, President Obama wisely left the proposal to increase the Medicare age out of his recent budget proposal. But with the super-committee's unprecedented power to cut programs like Medicare, we need to remain vigilant to ensure this misguided idea is not implemented. Young Latinos have a larger stake in this debate than most realize.