On Raising (and lowering) the Medicare age

A new poll shows that raising the Medicare age slowly to 67 (presumably to unify it with the Social Security full retirement age) is not popular. It is a bad idea in policy (TIE FAQ is good) terms because all you are doing in a state with an exchange and a Medicaid expansion is mostly shifting the healthiest Medicare beneficiaries into a smaller risk pool so it will be more expensive. In a state without a Medicaid expansion, you will get more uninsured near poor who are likely to have relatively high needs due to age. I have often said it is also a near certainty that we will do this (raise the Medicare age) some day because for many Republicans it sounds like “fundamental reform” and they haven’t shown themselves to have so many ideas on what to actually do in health reform, and certainly not the political will to push them. Raising the Medicare age to 67 remains popular with conservatives because it is a simple idea that seems consequential in ways that they assume will reduce spending, and seems bold. As the FAQ above shows, that is not really true, but this idea remains front and center for many.

Playing along, Austin Frakt tweeted out the following good question

The analog would be a reduced Medicare benefit (fewer covered services and/or higher cost sharing) for the balance of ones life. That is what happens with Social Security. If you retire at 62, you receive reduced Social Security benefits for not only your entire life, but the entire life of a spouse who may receive benefits based on your standing in Social Security(I have tried many times to explain to my mother in law that that is a big part of why her Social Security benefit is lower than many of her friends, even though her husband has been dead for 12 years; he starting claiming benefits at 62 due to health problems).

It might not be such a great idea to have a literal analog (reduced health care benefits for the balance of earlier claimers’ lives, given they are likely to be sicker than average), but an early Medicare benefit would be a good option generally. A big part of the calculus is “as compared to what?” If we are assuming exchanges are up and going, an early Medicare benefit allows some into a larger risk pool, and especially if they are more likely to be ill, they would improve the risk pool of exchanges. If you assume “no we will fight exchanges and not do Medicaid expansion” you are just saying you are willing for some to not have reasonable health and insurance and care. Not my preference.

However, we do need a deal at some point on health reform, not really for the fiscal cliff, but because it is too consequential to forever remain a political football. Down the path suggested by Austin’s tweet, what could the parts and steps look like?

  • Any state that sets up an ACA exchange, in that state, we will demonstrate competitive bidding in Medicare advantage 2 or 3 years later, using the experience of the state exchanges to inform (Austin’s FAQ on comp bidding is great).
  • Two or three years after that, we move to allow a “Medicare buy in” for persons younger than 65, say to 62 (or 60 or whatever). This will be ~ 5 years after state based exchanges have been up and going and will give time to see if there are parts of states in which private plans don’t seem to be working out (most likely rural areas with few people, and more difficult to set up networks, etc.). There are endless permutations (only private options in early Medicare years, different benefits, depends on how many plans available in a county, etc.)
  • If we were going crazy with this, then after that, allow states to start buying in low income portions of Medicaid (not duals and long term disabled) into private insurance sold in exchanges, after they were up and going and the risk pool is getting larger and larger.
  • Then we might start letting more and more people the choice of buying in the exchange and over time, slowly move away from health insurance as a benefit of employment.

If you took seriously the implications of unifying Medicare’s age with Social Security, it starts the conversation, not ends it.

cross posted at freeforall

Comments

  1. says

    Obviously there’s pretty good cost data on medicare and medicaid outlay for patients in the 60-70 range. So allowing buy-in at a slight premium would seem to make lots of sense, especially considering that individual insurance for people in the age bracket has long since gone through the death-spiral routine.

    • Don Taylor says

      Yes. could especially be needed in some states that have rural areas where plans may be hesitant to sell plans.

  2. Keith Humphreys says

    Don: I would like to see a white paper that breaks free of the assumption that there need be some link between the age qualifier for the two programs. They do different things and people have varying control over their need for them. What I wonder would be the effect of lowering the Medicare age to 60 and raising the Social Security age to 70.

    • Ken Rhodes says

      I believe that lowering the Medicare age, independent of ANY other action, would lower health care costs.

      The “crisis in health care” that we all talk about is the crisis in health insurance. But to the extent that insurance companies exert leverage to get providers to accept somewhat lower fees than their “retail list prices,” then health insurance has a side beneficial effect of lowering our sum-total national health care cost. And there is no private insurance company that has the leverage the Federal Medicare program has. So the sooner we get people out of their private insurance into the BIG insurance program, the more we can lower the sum-total cost.

      Additionally, of course, there is the side issue of where the premium dollars go. Health care “costs” paid by private insurers include overhead components for administration, commissions to agents, and profits. Medicare has lower administrative costs, and no commissions or profits.

      And finally, we need to disabuse our voters of the ridiculous notion that the socialist Democrats are trying to take over health care, and take away the individuals’ right to make their own decisions, or choose their own doctors. That b.s., repeated frequently enough, has a devastating effect on any real dialogue on important issues that ought to be addressed, like why health care costs so much and where the health care dollars are currently going.

      • John G says

        so work to the single-payer publicly funded health care ideal by gradually lowering the age for Medicare. Once it’s at 25, you’re there!

        • NCG says

          Pretty much. This whole ACA seems like a full employment scheme for health care consultants, more or less. With a side dish of increased insurance for, you know, people.

  3. says

    Don: ¨It is also a near certainty that we will do this (raise the Medicare age) some day because for many Republicans it sounds like “fundamental reform” … (my italics).

    The current Republican party is a permanent minority, like the French Communist Party, with a similar power to obstruct but not to lead. 2012 was their best chance in a generation of returning to power, and they blew it. The party, not Mitt. Demography, the economy, cultural evolution and Mother Nature point to Democratic domination as far as the eye can see, barring a Democratic implosion, another economic crisis, or major scandal. At some point, politicians under the Republican label will probably return to power, but they won´t look like today´s GOP.

    Obama and Reid have to talk to them today for tactical reasons to get anything done. But for policy wonks, why bother? Our only interlocutors are anathematized heretics like Bartlett and Frum.

    • says

      Possibly on the permanent minority, maybe even likely per Presidential politics, but they control so many state legislatures that this is not likely to be true of House of Reps for some time. For the cost stuff I think we need to do, it will talk the political cover/responsibility of both parties, so I do think policy wonk types need to engage. However, it is possible I am just wasting my time.

  4. bdbd says

    My question is, what are the most important specifics about Medicare, demographics or aging and health that people who favor this kind of change (raising the eligibility age) do not understand or take account of?