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4 Terrible Arguments for Raising the Medicare Age and Why They're Wrong

Why liberals should not even consider raising the Medicare age to 67 as part of a budget compromise.

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Remember when a lot of liberals, including Paul Krugman and Ezra Klein, were saying that Hillary Clinton’s 2008 health plan (now the Affordable Care Act) will provide something like universal coverage? I said it would leave at least 15 million people uninsured. I was wrong: The CBO concluded that 25 million people will be left uninsured under the Affordable Care Act. (That figure was later raised to 28 million after the Supreme Court overthrew the bill’s Medicare provisions.)

A lot of people will be unable to afford private health insurance under the Act, even with subsidies. (I was also shouted down back then for saying that the subsidies would be unreachable for a lot of middle class families.)

People who are making the argument for the Medicare age as a “compromise” seem to have also forgotten that the Act allows insurers to charge as much as three times in premiums for covering older (and therefore costlier) enrollees.  This “significant chunk” of middle class voters wouldn’t find itself fighting for an Act that requires them to buy that insurance.

They’d be hit with a tax penalty instead – and still be uninsured.

Style Council

And yet Matt Yglesias writes that it would be “foolish to categorically rule … out” increasing the Medicare age.

“There’s no need for the ritual scourging,” Yglesias adds, linking to a piece by  David Dayen which takes Chait to the woodshed.  ”Ritual scourging,” like “ideological inflexibility” and “reflexive hostility,” is a phrase which means “a strong argument against a position I support.”

Yglesias’ position is unclear.  At first he defends Chait’s position, at least in principle. Then he says that “people will disagree” about whether or not the Affordable Care Act is an acceptable substitute for Medicare, “but we can all see why theObama administration would be inclined to think that it is the case.”

Yes, people will disagree. But does Yglesias disagree? It’s unclear.  And yes, we can see why the Obama Administration might be biased toward the idea. But is it a good or bad one?

By contrast, an  earlier Yglesias piece about the Medicare age lays out much (though not all) of what’s wrong with the idea of raising it, and makes his position perfectly clear: It’s a bad idea.

Getting It Right

In that earlier piece, Yglesias makes one of the clearest, most concise arguments I’ve seen yet for the approach I and others favor.

“Rather than shrinking Medicare,” he writes, “we ought to be taking advantage of the program’s lower costs. One way to do that would be to lower the retirement age—potentially all the way down to zero—and bring more people into the program. That would reduce system-wide costs but require higher taxes or bigger deficits.”

That’s exactly right, and any self-described “deficit hawk” who doesn’t embrace should be called out for hypocrisy – even if that amounts to a “ritual scourging.”

What’s more, I would argue that deficits could go down under this scenario. The economy would expand more quickly, which is likely to put deficits in better balance as a percentage of the GDP.  We would also eliminate the tax breaks for employer-sponsored health insurance, which would provide another offset.

Yglesias also proposes reviving 2008′s “public option,” reminding us that the CBO said it would save $68 billion in subsidies while lowering out-of-pocket costs.  That’s another idea we’ve embraced as well.

Medicare works. It delivers good coverage, and it does so more cost-effectively. It should be strengthened, not weakened. It shouldn’t be “compromised” or sacrificed on the altar of lower expenditures, especially for an alternative that will actually cost more.

 
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