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Tue Nov 27, 2012, 11:05 AM

Medicare and the Cliff Negotiations

About raising Medicare age

http://jaredbernsteinblog.com/medicare-and-the-cliff-negotiations/

There’s a useful piece in the WSJ this AM on some of the costs and benefits of one the entitlement cuts that has been raised in fiscal cliff discussions: raising the Medicare eligibility age from 65 to 67.

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The piece leaves out an important point that should also be noted in these discussions about raising the retirement or eligibility age for social insurance: while older persons are living longer on average, there’s a significant gradient by income, with life expectancy up only slightly among older men in the bottom half of the income scale. Unfortunately, healthy, wealthy, aging policy makers often take themselves to be the sole reference people here…they are not.

So does this mean Medicare savings shouldn’t be on the fiscal cliff bargaining table? No, though I wouldn’t fool around with the eligibility age. The President offers up about $280 billion (over 10 years) of cuts in his budget, including modified payments to providers, cost sharing with higher income beneficiaries, and lower drug costs in Medicare Part D. That’s a fine place to start.

And a fine place to stop, for now. The real savings in health care will come from cost control measures enacted in the Affordable Care Act but no where near fully implemented, and it’s just too soon to know if they’re working. We must give them a chance—early indicators are positive, though they may be conflated with recession-induced (i.e., temporary) dips in demand. If they fail to control costs, then it’s back to the drawing board. But now’s the time to watch and evaluate, not to reduce access to what is a highly efficient, effective form of health coverage for the nation’s seniors.

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