For most people, the concept of retirement and the number 65 are practically synonymous. That’s true in large part because the federal laws that instituted Social Security (in the 1930s) and Medicare (in the 1960s) established 65 as the programs’ eligibility ages. But Congress has already raised the Social Security eligibility age, of course, and it looks as though there’s a chance it might do the same with Medicare — if not right away, then in the near future.
Increasing the Medicare age threshold from 65 to 67 between now and 2021 would save the government $113 billion, according to the Congressional Budget Office. In the current fiscal-cliff round-robin, Republican congressional leaders have advocated the increase as part of a deficit-reduction compromise. President Obama has said in the past that he’s open to it—and he said it again this week to Barbara Walters—but today senior Democratic Sen. Richard Durbin of Illinois is saying it’s no longer on the table, according to the Wall Street Journal.
Still, the idea’s persistence shows that we’re bound to be grappling with it again. Those who argue for the change say it’s an inevitable concession to inexorable trends: As the president told ABC News on Tuesday, “The current path is not sustainable because we’ve got an aging population and health care costs are shooting up so quickly.” Increases in life expectancy were one of the reasons lawmakers agreed back in the 1980s to raise the Social Security threshold – after all, when Social Security was introduced, the average American didn’t live to see 65. And some health-care reformers are optimistic that the Affordable Care Act, a.k.a. ObamaCare, could help take the sting out of the age hike, by making insurance more affordable for people who are over 50 but still too young to qualify for Medicare. (Big caveat: That outcome depends a great deal on whether health-care exchanges and other reforms succeed in keeping costs down—something yet to be proven.)
Opponents of the increases, including House Minority Leader Nancy Pelosi and many other top Democrats, argue that even in an ObamaCare best-case scenario, raising the eligibility age will put a huge financial burden on people who will be turning 65 over the next 10 years. Many of those folks, they argue, will now have to figure out how to pay for health care for an extra year or two, just at the age when their health insurance would be the most expensive. The Center on Budget and Policy Priorities, a centrist research group, has argued that an age increase would ultimately just shift costs to employers (for 60-somethings who were still working), to state Medicaid programs (for poorer people in the group) and to the patients themselves.
However this debate resolves itself, I think that neither side is paying enough attention to another factor: Americans on average may be living longer, but they aren’t necessarily arriving at their mid-60s fit as a fiddle and ready for more 40-hour work weeks. According to the Center for Retirement Research at Boston College, the average man retires by age 64, the average woman by age 62. And in many cases, poor health is a factor in their decision to leave the workforce as early as they do. Figuring out how to keep those folks’ medical bills paid is a challenge that will extend far beyond the current round of negotiating.