The current age at which Americans are eligible for Medicare is 65.
There are strong indications from the fiscal cliff negotiations in Washington that in exchange for a (low) two percent increase in the tax rate on high-income earners, the Republicans will ask for – and get from President Barack Obama – an increase in the Medicare eligibility age to 67.
Since people are living longer these days, you might ask, what’s so wrong with raising the age for Medicare? Before we get to that, here’s a short background on where the talks sit now.
I regularly disagree with Washington Post pundit Ezra Klein but I don’t doubt his backdoor connections to the Obama administration. Last Friday, he wrote about the trade-offs we are likely to see in the fiscal cliff deal [emphasis added]:
”The harder question is what Republicans will get on the spending side of the deal. But even that’s not such a mystery.
“There will be a variety of nips and tucks to Medicare, including more cost-sharing and decreases in provider payments, and the headline Democratic concession is likely to be that the Medicare eligibility age rises from 65 to 67.
As firm as the president continues to stand on tax cuts for the wealthy, he has always been wobbly on what he calls “entitlements.” This is what he said last week (not for the first time) in a speech to the Business Roundtable [emphasis added]:
“We’ve seen some movement over the last several days among some Republicans. I think there’s a recognition that maybe they can accept some rate increases as long as it’s combined with serious entitlement reform and additional spending cuts.”
In other words, of all the things that could be cut from the U.S. budget, the Obama administration goes straight for old people first.
Now as to why not increase the Medicare eligibility age, here are a couple of thoughts:
Some say that because we live longer nowadays, it’s no big deal to raise the Medicare eligibility age. The problem with that argument is that only the rich are living longer. Life expectancy is closely related to income and while it has increased dramatically for the highest earners, it has barely changed for the bottom half for many decades – the people who most need Medicare coverage.
Raising the age would also cost you and me and all Medicare beneficiaries higher Part B premiums. Removing the youngest – and, therefore, healthiest – eligibles, would create a higher average cost.
Adding 65- and 66-year olds to employers insurance rolls would create the need for across-the-board premium increases in workplace health coverage. And, of course, those elders who sought coverage at the new state and federal exchanges would raise premiums for the same reason.
As I have mentioned here in the past, big changes to Medicare (and Social Security) should never be done as hastily as these cliff talks are taking place. Economist Jared Bernstein agrees:
”But bigger, structural changes, like raising the Medicare eligibility age or switching to the chained CPI are more complex and deserve more discussion and debate.”
Bernstein offers some sound advice on what some sane savings in Medicare might look like:
”That doesn’t mean some changes, including cuts, shouldn’t be part of the cliff negotiations. The President’s team, I think, could bring to the table around $400 billion in Medicare cuts over 10 years that largely come out of more efficient drug purchasing, other delivery side savings (paying for quality over quantity), and increase premiums on higher income seniors. Those look to me like smart savings and important negotiating material.”
It always amazes me that the experts who seem to me to have the best, most logical solutions are never the ones Congress or the White House talk to.
And finally, here is Ezra Klein again when he subbed for Rachel Maddow last Friday and explained in under two minutes why increasing the Medicare eligibility age is nothing more that a wildly expensive cost shift:
A deal probably needs to be struck by the end of this week to go into effect in time to avoid the fiscal cliff so time is short.
Sixty-seven percent of Americans oppose such cuts as raising the Medicare eligibility age. You might want to reinforce that point with the White House.
You can call them directly at 202.456.1111. Or email the White House here.
At The Elder Storytelling Place today, June Calendar: The Fourth Quarter