With the sequester set to kick off on Friday some in Washington are scrambling to figure out a “grand bargain” type deal to cut spending while protecting social programs. But one plan that would actually work has yet to be considered or endorsed by any major player – lowering the Medicare eligibility age.
Many Americans would be surprised to learn that Medicare is the most efficient healthcare provider in the country. It has lower administrative costs than all the health insurance providers and delivers a better quality of service. Rather than increasing the Medicare age as the Republicans aim to do with the Obama Administration willing to have that provisions as part of a “grand bargain” – the actual fiscally responsible action would be to lower the age to bring more Americans into the most efficient and effective healthcare system available.
Steve Brill, who wrote Time Magazine’s cover story on rising healthcare costs, agrees. In a discussion on ABC’s This Week Brill explained to the panel why lowering the Medicare age would go a long way in controlling healthcare spending.
RATTNER: But there’s a fundamental point here, Stephen, I think your piece was great. And I think you’re points are right, but I also don’t want people to be confused. I don’t believe that we can cut our way, change the pricing, do all the things you’re talking about and still save Medicare. The average person who’s at Medicare retirement age has paid in some like $122,000 in the system. They’ll get back $387,000 back in benefits. That’s three times. You’re not going to reduce that $387,000 by hospital cuts and this and that. We have to still have fundamental Medicare reforms to make those numbers work.
BRILL: Well, if you put Medicare in the context of the larger health care system, and this is something that everybody at this table is going to think that I should go to a mental hospital when I get finished saying this, the government and all of us would actually save money if you lowered — I said lowered the age for Medicare. If the Medicare age were 60 instead of 65, the economy and the taxpayers would actually save money. And George, please don’t look at me like that.
RATTNER: You’re potentially right. And part of the argument — you’re taking people out of the Medicare age to 67 is you’re taking people out of the Medicare system.
BRILL: Right. And what you would be doing, is you would be putting the most efficient player, which is Medicare — Medicare spends 80 or 90 cents to process a claim and the health insurance companies spend $18 or $20 or $25 to process a claim. Health insurance companies pay two, three, four times what Medicare pays for various services. So if you lowered the age, you would put more people into the bucket of much more efficient health care.
And the worst part about it is, the reforms that we have now, with the president’s plan, are actually going to raise the costs because all of the people who are 60, or 62, or 63, who can’t afford the premiums that they’re going to have now, are going to be subsidized by the taxpayer.
The opponents of such a plan are obvious, the insurance and pharmaceutical companies who enjoy gouging consumers. But if spending is such an important issue, so vital to America’s national security and future, shouldn’t every plan be on the table? With the “grand bargain” endorsed by President Obama increasing the Medicare eligibility age the spending problem will actually get worse with more Americans staying in a more inefficient healthcare system longer with costs. Costs that will ultimately be paid later by taxpayers.
Washington does have a spending problem, it’s called private insurers.