Is Obama Selling Us Out on Medicare?
I want to put a public service announcement on top of this post: The fiscal cliff scenarios discussed here may never become reality. The worst sell-outs of liberal principles allegedly under consideration by the White House, particularly a hike in the Medicare eligibility age from 65 to 67, may be trial balloons by staffers, or outrages floated in order to make other compromises more palatable to progressives later. Besides, given the stranglehold the Tea Party still has on John Boehner, President Obama can afford to make bad proposals and even promises: right-wing extremists will probably never agree to the tax hikes that would force him to keep them. He could promise that David Axelrod would not only shave off his stache but cut off his nose, confident that his advisor’s schnoz would stay put.
And I admit: I’ve howled at reports of Obama “betrayals” before, only to find later that the president negotiated a better deal than early reports showed, Exhibit A being the payroll tax holiday and extended unemployment benefits he got in exchange for extending the Bush tax cuts after the “shellacking” of the 2010 midterm elections.
Still, progressives are right to howl at reports, most reliably from Ezra Klein in the Washington Post, that the White House is prepared to make big compromises to achieve a fiscal-cliff deal. Klein reported Friday that “smart folks” say the administration is prepared to raise the Medicare eligibility age to 67 and compromise on top tax rates, bringing them to 37 percent, not the 39.6 percent they’ll go to Dec. 31, to avert the supposed “cliff.”
These are terrible ideas. Raising the Medicare eligibility age is so bad that I literally can’t believe the president would consider it. Even though there’s evidence he might. But New York magazine’s Jonathan Chait believes it, and moreover, he thinks it’s a compromise liberals should accept. “Summary argument,” Chait wrote defending his case: “It carries disproportionate symbolic weight with Republicans, people will still be covered by Obamacare, and it will create a constituency against Republicans’ efforts to nullify Obamacare.”
The entire progressive Internet went all in on Chait over the weekend, and I’m reluctant to pile on, but, well, I can’t resist. I’m an ardent liberal, probably to Chait’s left, but his reasoning epitomizes stereotypical liberal elitism and backwards social engineering. Let’s take people out of a good program that they love, Medicare, and put them in a (so-far) non-existent program they don’t trust, Obamacare, as a way to widen support for Obamacare. In other words, take away something they like, and give them something liberals think they should like. This is why people hate (stereotypical) liberals.
But it’s not just Chait who believes the deal is possible. Obama-doubting progressives like my friend Glenn Greenwald point to multiple reports that the president was willing to raise the Medicare eligibility age in order to reach a debt-ceiling “grand bargain” in 2011. And facing suggestions on Twitter (including from me) that the supposed Medicare proposal wasn’t genuine, Ezra Klein tweeted at me and Greenwald: “yes, given how widely reported that was, I’m baffled by the disbelief that age is in the negotiations.” He followed up, when people blamed the messenger (him) for the bad idea, by saying: “I don’t want to raise the Medicare age. I’m reporting that it may happen.”
There are so many things wrong with raising the eligibility age that I still can’t believe it’s under consideration. That’s not doubting Klein; it’s just a failure on my part to imagine that data-driven leaders — Republican or Democrat — would propose it. It doesn’t save money; it’s a shell game that just pushes costs around. While it’s possible that lower-income 65 and 66 year olds would be eligible for Obamacare, that means we’d be subsidizing them anyway. Besides there’s no guarantee such subsidies will exist: Republican governors are refusing to expand Medicaid or create the insurance exchanges to make it possible. Even Obama’s new GOP BFF, Chris Christie, says he won’t do it in the blue state of New Jersey. Remember, too, that Obamacare works through the private insurance industry, which has at least five times the administrative costs of Medicare.
The most likely scenario is that seniors will bear the cost of insurance themselves – or go without insurance entirely. That means they’ll be sicker when they do eventually qualify for Medicare (this already happens, by the way, when older Americans can’t afford insurance that covers preventive care or treatment, and let illnesses fester until they’re covered by Medicare.) That too means higher Medicare costs. The move might save the federal government $5.7 billion, at best, at a cost of at least $11.4 billion to states, seniors and employers, according to the Indiana University School of Medicine’s Aaron Connell in the Wall Street Journal.
In the single best single rebuttal to the whole idea, Connell makes plain its revolting class bias. Beltway types like to say a hike in the eligibility age of both Social Security and Medicare is necessary because Americans are living so much longer, but that’s not true for all of us. People in the top half of the American income scale have seen life expectancy increase by more than five years since 1977; those in the bottom half experienced an increase of barely a year.
Meanwhile, a compromise on the top tax rates is likewise a bad idea, because 39.6 percent is already a compromise. Everyone who talks about rebuilding the middle class needs to acknowledge how we did it last time around: With a top marginal tax rate above 90 percent through both Eisenhower administrations. John F. Kennedy cut it to 70 percent, and that’s where it stayed until Reagan slashed it – and we know how good the Reagan revolution was for the middle class. I’m not saying that’s where it should return, but if we keep sacrificing progressivity, we’ll never have the money we need to do what we need to do. Tax rate hikes shouldn’t stop at $250,000. There should be more, and higher, tax rates on the super rich.
The Democrats’ ace in the hole in this debate is their willingness to go over the fiscal cliff, to let the top tax rates go up, and then come back with a bill Jan. 3 to cut taxes for everyone but the top 2 percent. As many have said before, the “cliff” is more like a slope or curb, it doesn’t take effect immediately, and there’s time for negotiation to avoid or blunt its worst impacts. The more liberal newly elected Congress could also take up the issue of spending cuts that will hit low-income Americans.
The White House seems to be playing both sides of the street on the question of whether it’s thinkable to go over the cliff. On Wednesday, Treasury Secretary Timothy Geithner told reporters the administration is “absolutely” prepared to do so if the GOP won’t budge on top tax rates. But that same day, the White House was meeting with Latino groups to build support for a theoretical fiscal cliff deal, by outlining the ways Latinos would be hurt by the tax hikes and program cuts that would (eventually) be triggered. Thursday they did the same thing with African American groups. As long as we’re getting racial, it’s worth pointing out that keeping the top tax rates low, or compromising at 37 percent, is an absolute Christmas gift for wealthy white people, who make up a wildly disproportionate share of the top earners. And the lower life expectancy of African Americans makes raising the Medicare eligibility age particularly cruel.
So yeah, I think these are appalling ideas. We just had an election in which the president promised to protect Medicare, and never once publicly supported raising the eligibility age to 67, while Romney’s advisors said his plan included hiking the age (Romney himself avoided details about any of his plans.) Post-election polls find that two thirds of voters oppose increasing the Medicare eligibility age. Should this deal become reality, it would reinforce the cynicism Americans harbor about government – and about Democrats. Deservedly.
The truth is, Obama should be pushing to lower the Medicare eligibility age, to let those 55 and over opt to buy into the program with their own money. The premiums paid by a younger, healthier cohort would help stabilize the program, while the benefits of getting that population insured earlier would keep costs down later. That’ll never happen, you say? Well, we can make sure it’ll never happen if progressives never ask for it.
Honestly, the only real reason to throw seniors into the Obamacare pool is to put more people at the mercy of private insurance, and weaken both the economic and political basis for Medicare. On “Up With Chris” today — hosted by our own Steve Kornacki, and featuring me as a guest — former Romney “health policy advisor” Avik Roy enthusiastically backed the notion of moving seniors from Medicare to Obamacare, even though his former boss wanted to repeal Obamacare, as you’ll recall. Here’s what he said:
I have to respond to this interesting hyperbole about Medicare…If you raise the retirement age for Medicare, we have the Affordable Care Act as the backstop. Everybody under 400% poverty level is still covered with the affordable care act in place. So what we are really talking about is means testing Medicare by raising the retirement age. People who are upper income, above 400% of the poverty level won’t be subsidized if they’re younger retirees. It’s where entitlement reform should go, to expand it into the retiree population.
Actually, it’s where the GOP thinks “entitlement reform” should go — into the private sector, with mutual funds handling Social Security, and private insurance taking back the Medicare population. If this is what Obama is trying to do, then he’s ignoring the vote he just received and betraying the social movements that got us the rights we have today.
So I don’t believe the White House will ultimately make this deal — and I’m not accusing Klein or anyone else of fabricating the story; I’m just hoping it’s a trial balloon, as Digby says, that we’re meant to shoot down. But that means progressives are right to yell like hell to make sure.