Raising the Medicare Age Won't Save the Government Money: So Why Is It On the Table?

This is an excellent read about the idea of raising the eligibility age for Medicare, the plan that Sens. Joe Lieberman and Tom Coburn cooked up that seems to have been embraced by the White House. And not just because the authors, Professors Theodore R. Marmor and Jerry Mashaw, both of Yale, call the idea "dopey."

The only supposedly redeeming feature of the idea is that it would reduce Medicare spending by $7.6 billion a year, according to a recent Kaiser Family Foundation study. But that spending would only be shifted, not controlled.

Indeed, total health-care spending would be increased as both employers and seniors paid more. The Kaiser study estimates that 65- and 66-year-olds would spend another $5.6 billion a year, while employers would spend another $4.5 billion. That's spending $10.1 billion to save $7.6 billion.[...]

[...]The problem is rising health-care expenditures, whether public or private.

But that has nothing to do with the number of Medicare beneficiaries. When most Americans turn 65 and retire, they shift from private health insurance to Medicare. More doing so means more Medicare expenditures. But this is a change in where expenditures show up—in public or private budgets—not in total health-care spending.

So there are two questions: How should public expenditures be paid for? And how can health-care spending be better controlled? The Lieberman-Coburn proposals conflate these issues, treating budgetary shifts as real increases or decreases in total health-care spending.[...]

We have a real problem with medical spending in the United States, but it is not restricted to Medicare. We have little understanding of why other systems have been able to expand public insurance without anything like our growth in costs. And we have reformers who have faith in patient cost-sharing without justification. This combination has left us vulnerable to genuinely daft ideas.

I and others have made this argument before: cost-shifting is not cost reduction, and even the relatively small decrease the government would see in spending would likely be shifted to other government programs. There would be some shifting of the older population who would otherwise have been eligible for Medicare to disability, when they are either too old or too ill to continue working and can't hold out an additional few years for Medicare.

Additionally these older Americans would end up in the health care exchanges being established by the Affordable Care Act, trying to find private insurance. Insurers will have to take them on, and because they will be serving a higher risk population they'll raise premiums and will have a plausible excuse for doing so. Which means, in turn, the government will probably be spending more on providing subsidies for patients participating in the exchanges. Or, older people roll the dice and go uninsured. Some of them could become very ill, and then by the time they do get on either Social Security Disability or Medicare, are so sick they'll cost far more to treat than they would have with earlier coverage, and treatment.

There's nothing in the idea of raising the eligibility age for Medicare that "bends the cost curve" of health care for older Americans. Shifting costs isn't saving costs. It's making life more insecure, more difficult, and more expensive for some of the people who can least afford it.


Daily Kos / By Joan McCarter | Sourced from

Posted at July 27, 2011, 5:55am

Sign Up!
Get AlterNet's Daily Newsletter in Your Inbox
+ sign up for additional lists
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Election 2018