• Grand bargains and Medicare

    Ezra Klein following up on Marc Goldwein’s defense of slowly raising the Medicare age to 67 from 65. As Austin and Aaron wrote in response to Sen. Lieberman’s suggestion, raising the Medicare eligibility age and doing nothing else would harm the health of persons in that age group, because it would lead to more uninsurance. Their piece notes that the paper they were referencing that showed health harms due to lack of insurance did not imagine the implementation of insurance exchanges with income based subsidies starting in 2014 that are a part of the ACA.

    McWilliams et al.’s analysis does not take into consideration the effect of health reform. Provided it stays on the books, the non-elderly will have different options in 2014. Still, the analysis shows the value of health insurance, and in particular of universal coverage.

    In October of 2009, I wrote a commentary with Frank Hill who was former Senator Elizabeth Dole’s Chief of Staff. It came out of he and I trying to see if we could agree on some steps ahead in how the then Senate bill could be tweaked to try and get some bipartisan support for health reform. One of the things we landed on was raising the Medicare eligibility as Lieberman suggested BUT that was in the context of moving ahead with insurance exchanges being implemented with income based subsidies.

    If you raise the Medicare eligibility age and do nothing else (repeal the ACA) then it is a very bad policy. However, if it were a part of a political negotiation that lead to the agreement by both parties to implement the ACA, it would be a policy worth considering depending upon the other elements of the elusive grand bargain. Eventually SOME health reform strategy has got to become the policy of both political parties if we are ever going to work things out.

     

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    • The “raise the eligibility age” component of the Lieberman proposal was the least signficant, and can easily be modified to meet objections. Why has no one written about the proposed increase in premiums and increase in payroll tax to meet the future funding shortfall? Or what alternatives exist for meeting the shortfall if traditional Medicare is not replaced by the Ryan Plan to End Medicare that is Not to Be Called a Plan to End Medicare.

      These are the really important elements of his plan, yet no one seeems to comment on them. Of course, there is no chance whatsoever that they would become law.

    • @David R
      Liberman’s ‘plan’ per se is not that important as you say. Raising any eligibility age seems to get lots of attention, I think because it doesn’t differentiate by income, whereas a premium increase would likely be linked to income. If we ever have a balanced budget again, it will take a mix of consequential changes: spending will have to be lower than now projected, and taxes (premiums etc) of some sort will have to increase. We are in a holding pattern until they either cut a deal, or don’t and start the 2012 election in earnest.

    • @Don Taylor

      I think you are correct. If you strip away the particulars, for the time being, of the Ryan proposal and the Lieberman proposal you have the Ryan proposal saying that the Government will pay a lower percentage of health care costs for seniors as payroll tax rates are unchanged and seniors will pay a higher amount for their health care to make up the shortfall vs Lieberman’s proposal which is that government will share some of the higher costs of senior health care with seniors as payroll tax rates are increased and Medicare premiums are increased.

      The Ryan plan, of course, assumes away higher costs as the “free market fairy” keeps senior health costs under control. There is, of course, no “free market fairy” to do this.

      I do not, however, think this issue will be decided until the Medicare Trust Fund is depleted, forcing

      (1) Seniors to bear all of the shortfall, vis a vis Ryan or

      (2) Seniors and the government share some of the shortfall vs a vis Lieberman or

      (3) Government to absorb all of the shortfall vis-a-vis using General Revenues to fund the Trust Fund shortfall or

      (4) The Default Option, reducing Medicare benefits to equal Medicare payroll tax revenues, which is the very close to (1) in that Seniors would either have to go without some medical care or make up the shortfall in higher costs they themselves would pay.

      This looks like a 10 to 15 year political battle.Even if something is enacted prior to 2025, it can always be changed.