• I’m counting this as a win for TIE

    Per Ezra Klein, raising the eligibility age for Medicare is off the table. Why?

    First, the cutoff for Medicare eligibility age has been under consideration repeatedly, giving health-care experts more time to run the numbers and parse their results. Their conclusion, essentially, was that raising the Medicare eligibility age is counterproductive: It cuts the deficit but raises national health spending as it moves seniors to more expensive insurance options. Some in the White House are simply more skeptical of the policy than they were two years ago.

    This is one of those issues for which we’ve been beating a drum, even over at other sites. I’m counting this as a TIE win, policy-wise.

    @aaronecarroll

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    • We can hope. I think this is a very entrenched idea on the right and we have not heard the last of it.

      Steve

    • Yay TIE! You folks R-O-C-K!

    • I understand the concern for increased premiums and an increase in the numbers that might forgo coverage, but are these numbers as damaging as one is led to believe by those opposing the increase to the Medicare eligibility age? The Congressional Budget Office (CBO) just released an issue brief on this very topic on January 11. Here are some highlights. Even with increases to the Feds for Medicaid and the Exchanges, the CBO is citing a net $113 billion savings. Unfortunately there was no private sector analysis, so take that as you will.

      “CBO estimates that raising the Medicare eligibility…would reduce federal Medicare outlays, net of premiums and other offsetting receipts, by $148 billion from 2012 through 2021. By 2035, Medicare’s net spending would be about 5 percent below what it otherwise would be…

      Some people who would have been covered by Medicare under current law would be enrolled instead in Medicaid, would receive subsidies through the new insurance exchanges, or would receive additional benefits as federal retirees. A later MEA would boost federal spending for Medicaid in two ways. First, some people who were not eligible for Medicare would participate in Medicaid after 2014. Second, people over 65 who would have been enrolled in both programs—and for whom Medicaid would have paid their Medicare premiums—would instead have Medicaid as their primary source of coverage until they reached the new MEA. Subsidies for insurance coverage purchased through insurance exchanges also would increase because some people whose eligibility for Medicare was delayed would receive those subsidies instead. CBO estimates that the effects of changes in federal spending on Medicaid, exchanges, federal retirees, and Social Security retirement would be to offset about one-quarter of the Medicare savings, reducing net federal savings to $113 billion over the next decade.”

      Summary: http://www.cbo.gov/publication/42679

      Issue Brief: http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-10-2012-Medicare_SS_EligibilityAgesBrief.pdf

    • It cuts the deficit but raises national health spending as it moves seniors to more expensive insurance options.

      But it does change who pays for the healthcare so even though it costs more it may be better. It is generally better to have people spend their own money. Also people tend to be wealthier in their 60s than in their 30s.

      Another thing is that people seem to die earlier when they retire earlier (link below) and this seems especially true for blue collar workers. This weakens the argument that waiting longer to retire is very hard on the blue collar workers.

      http://www.webmd.com/healthy-aging/news/20051020/early-retirement-early-death

      http://www.medpagetoday.com/PrimaryCare/PreventiveCare/1980

    • But according to the CBO, most of this national spending will be through Medicaid and the Health Insurance Exchanges, correct? Granted, a private sector analysis piece would have been ideal, but regardless, assuming Medicaid and the Exchanges are the primary source for coverage for those between 65 and 67, the overall savings would still be $113 billion. Would this not slow the rising cost of healthcare? Also, when we look at the lower healthcare costs and the lower reimbursement rates for Medicare, are they not artificial rates?

    • It amazes me that people still continue to refer to CBPP’s and KFF’s numbers while completely ignoring CBO’s numbers.

      First, the numbers pumped by CBPP and KFF are based on 2014 full implementation. CBO’s numbers are based on gradual implementation. Major difference.

      Second, KFF and CBPP assume there is ZERO response in the labor market — people working longer. If a person works longer to keep working until they can get Medicare, that does increase costs to the employer who has to provide insurance for them. But it also contributes to economic growth — certainly the economic output of the worker more than offsets the increased healthcare costs — else the employer would fire the worker.

      Lastly, CBO’s numbers take into account increases in Medicaid, Exchange, and SSDI (which KFF and CBPP ignore instead assuming that DI people…get insurance on the exchange? medicaid? not sure) spending and still come out saying that from the gross savings, the federal government is left with net 3/4 (148 to 113). KFF and CBPP assume that out of the gross, only about 13% is left in net savings.

      Assumptions matter. And I’m disappointed that TIE keeps hammering at this only taking into account one set of assumptions without giving credence to the, ostensibly, more reliable and more accurate CBO numbers.

      • In the presence of exchanges, it is not evident how many more people would work longer. I would not assert the labor market effect of raising the Medicare age is zero, but it might be a lot smaller than you assume.

        Please point to a specific post that mixes up numbers. As it reads, your comment is an unsubstantiated rant. Trust me, we like to correct errors. But we can’t if you don’t point them out more specifically. Which post is wrong and why?

    • As I understand it, the exchange subsidies would not be available to a person that has access to coverage through an employer. This means refusing coverage from your employer to go to the exchange (unless it’s “unaffordable” from the employer) isn’t an option. If employers drop coverage for 65-66 they have to pay a penalty. That’s a whole separate analysis obviously, but certainly a good number of people would work longer. But sure I’ll accept that the effect is likely small.

      Don’t get me wrong. I’m not saying that TIE is mixing up the numbers — I’m saying that the numbers CBPP quotes from KFF don’t tell the whole story and it’s misleading to rely solely on those. The KFF study is what TIE mainly refers to: http://theincidentaleconomist.com/wordpress/monkeying-with-the-medicare-eligibility-age/

      I’ll grant that KFF’s distributional analysis is useful, but this is far from a decided issue. See CBO’s analysis which for some reason is often ignored: http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-10-2012-Medicare_SS_EligibilityAgesBrief.pdf.

      Pages 5-7 deal with raising the MEA. They acknowledge that cost-shifts would occur, but the savings are much more significant than those that KFF finds.

      • The issue on my mind is whether people will retire and take up exchange coverage in lieu of Medicare. The question is, holding employer behavior constant, how substitutable is exchange coverage for Medicare (+ supplement)?

        I will look more closely at the CBO document you linked to.

        • A fair concern. Why wouldn’t the coverage be substitutable, though? The only difference I can imagine is price — exchange will be more expensive for those above 400% FPL while less expensive for those below (excluding the ones who go Medicaid) according to the KFF study (page 10 @ .

      • I want you to know I took another look at the CBO analysis, to remind myself why I didn’t focus on it in the past. The reason is that it is not a steady-state analysis, but is based on whatever is captured by the intersection of the slow phase-in with the 10-year budget window. That’s totally fine, and it is, of course, the right analysis for the purpose of the real 10-year budget estimate. However, my interest was understanding the full implications of the policy once it was fully phased in, which is closer to what KFF did.

        Now, it is of course possible (likely!) that CBO and KFF would come up with different estimates even if they were looking at the same thing. And I do think CBO’s work deserves a mention. But it is very hard to put the two side-by-side. They’re not quite apples and oranges, but maybe apples and pears. Still, not close enough in approach for direct comparison.

        For all that, even at somewhat higher federal savings than KFF estimates, once one nets out the costs to non-government entities, I don’t like the policy. It’s not the right approach to reform. It doesn’t scale well. It doesn’t address the core problems in the health system. I can imagine circumstances under which I would support such a cost shift, but those circumstances don’t exist in America, or not now anyway.

        • That’s a fair point, and I think is one of the strong suits of most of KFF’s studies (they usually do a “steady-state” analysis). One of my main concerns with it are that you can miss some of the important time-relevant changes in costs and savings. This may or may not be true, but imagine that costs might be greater early on, while savings may take place later on — in my mind, this can be one of the reasons that CBO estimates about 3/4 net savings from the gross, while KFF estimates less than 20%.

          If we’re just concerned with net welfare, with higher savings, those hit hardest could be subsidized to offset much of the impact. A Medicare buy-in for instance, could effectively eliminate the $4 billion (if I remember correctly from KFF) impact on employers b/c of retiree health plan costs and if made mandatory, would keep Medicare pools the same as they are now. I don’t know what the cost would be, and maybe it would come out greater than the savings — but that’s not a discussion that’s happening because a lot of people have simply accepted KFF’s results as the end-all.