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December 08, 2012

Responding to Jon Chait on the Suddenly Possible Idea of Raising the Medicare Eligibility Age

Posted in: Uncategorized

So my old college pal Jon Chait (I promise before the end of my time here to pull out the parody my college humor magazine did of his column in the Michigan Daily) has responded to my criticism of his endorsement of raising the Medicare eligibility age, America’s worst new idea. I’ll get to batting that around in a moment.

As the kerfuffle was happening, however, this has become less of an academic argument. Ezra Klein writes that raising the Medicare eligibility age could become the centerpiece of a deal, based on what “smart folks in Washington” say. He even highlights Chait’s original argument, the entire premise of which is cracked. Apparently the idea here is that the reliance of those aged 26-64 on insurance exchanges to deliver affordable health care is not enough of a constituency behind the program, but adding in those aged 65 and 66 will simply put it over the top.

Klein actually rewrites Chait’s point to channel “the White House thinking here,” saying that “it’s not a huge (or smart) cut to Medicare benefits, and most of the pain will be blunted by the Affordable Care Act.”

Once again, Ezra, who sits at a desk for a living, can join Jon on a conference call with 65 and 66 year-olds to tell them why it’s so tolerable for them to wait two years – out of a life expectancy of another 15-20 – for Medicare benefits they paid into all their lives. I don’t know, 10-15% reductions in the benefit sounds like a lot to me, especially when you consider that poorer people, with a lower life expectancy, lose more of the benefit. When you add in that this only saves a meager amount of money for canceling 10-15% of the lifetime benefit, it makes it all the more horrible a trade. And you can’t phase this in slowly if you want to save any money with it.

As for this idea that most of the pain will be blunted by the Affordable Care Act, well, the Affordable Care Act does not yet exist in tangible terms, an entire political party remains dedicated to its destruction, we have not yet begun to figure out who will fall through its cracks and why, and in at least 9 states and as many as 33, there will be no Medicaid expansion, creating a pool of uninsured poor people living under the poverty line who cannot get subsidies at all and are likely to have major health needs. Telling them they have to wait two years for Medicare, with no other options, sounds like a great way to get them on the side of the government’s new structure for the health care system. “But we raised taxes on people making over $250,000 a year so you could be denied health care” isn’t exactly going to thrill them as a justification. And this is not a small percentage, new Census data points out that 15.1% of seniors live in poverty.

There’s also the point that, if you make over the 400% of poverty line, you get no exchange subsidies, and you just have to pay the astronomical rates (yes, insurers can charge more based on your age under the ACA) by yourself. Either that, or if you’re lucky enough to be employed at age 66, your employer will.

But the meat of this is here:

…The costs for this ACA solution are twice what the government will save if we go through with his plan. I don’t know how we can say this more clearly. The federal government will save $5.7 billion, but we will all pay $11.4 billion more. That’s a terrible idea, unless you think that the benefit is twice what 65 and 66 year olds were getting before. Let me put it this way: we could just tax the American people to raise $5.7 billion, provide Medicare to 65 and 66 year olds, reduce the deficit just as much, and that would cost us half what Len is proposing. Just because we can do something, doesn’t mean it’s a good idea.

Almost nobody benefits from raising the Medicare age, except perhaps federal government number-crunchers, who will ignore the cost-shifting to individuals and count it as an exceedingly minor budget “savings.” For the rest, everyone’s health insurance costs go up, the poor get hurt more than the rich, people will defer care and cause overall health to suffer, large union VEBA plans have to cut benefits, and on and on.

And all of this gets lumped in with “recent changes in health care” and will just increase dissatisfaction with those recent changes.

That’s a response to the full argument about raising the Medicare age; responding to Chait’s counter-argument hardly seems worth it, as it’s mostly churlish insults and evasions. Starting with this:

If Dayen thinks it is possible for Obama to avoid making any concessions at all to the Republican party without deleterious consequences — this probably is what he thinks, committed as he is to producing the mirror image of redstate.com analysis in which your party can always win if it just fights harder — he ought to explain how this could happen.

I don’t think that, I think that exchanging a series of cuts to Medicare and Social Security and the domestic budget in exchange for the $800 billion in letting the top-end tax cuts expire, a pitiful sum of new revenue, would make a decent liberal vision of government impossible and represent a sellout of these ideals by the President. Oh wait, I don’t think that, Jon Chait wrote that in March, referring to the 2011 budget talks. Maybe Obama should have fought harder.

In new-Chait-world where concessions have to be made, raising the eligibility age, which makes health insurance more expensive for every American and has a regressive impact, is just a really bad concession. I can hardly think of a worse one. Making health care in America demonstrably worse to politically protect new changes to health care is backward logic. If this got combined with a public option, or better, a Medicare buy-in, so the people facing a 10-15% reduction in their lifetime benefit don’t have that challenge, then at least we’re talking about something with possibilities. But I don’t really think that’s on the table.

As for the rest, it’s pretty hard to have an argument with someone who disavows his own position so much. It’s important to point out what bad policy this is, and the effect on individuals, because Chait’s whole point is that there would be political benefits here. Bad policy does not make for good politics, at least not in this case.

Sorry about my “tone.”

…OK, one more thing, from 12/7/12′s Wanker of the Day:

Dayen seems to be arguing that higher costs within Medicare — which will be small and hidden within larger and continuous cost increases in the system — will make 65- and 66-year-olds not care if there’s any government program that ensures they can obtain affordable health care. Political opinion is hard to predict, but this seems unlikely.

Aside from this misread of my point – the higher costs would be spread throughout the system – 65 and 66 year-olds already have a government program that ensures they can obtain affordable health care. It’s called Medicare and it works pretty well. Let’s not put it on a slow road to oblivion, please. Kthxbai


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