Conservatives Want To Raise the Medicare Eligibility Threshold To Make It Easier To End Medicare

Moneybox
A blog about business and economics.
Dec. 12 2012 10:28 AM

Conservatives Want To Raise the Medicare Eligibility Threshold To Make It Easier To End Medicare

Something that's been puzzling me about the debate over raising the Medicare eligibility age is whether this is something conservatives even really want to do. It's a pretty terrible idea on the merits and my understanding of the conservative position on Medicare is that the program needs "structural reforms" (i.e., privatization) not a minor tweak in the number of people who qualify for it. But Peter Suderman at Reason has a good account of why conservatives might think a minor tweak in the number of people who qualify for Medicare is a helpful step on the road to privatization:

The most important likely effect is political. Reforming Medicare is difficult in part because of resistance by beneficiaries, who hold a lot of political influence; indeed, the fact that some beneficiaries might have to pay more for their insurance (CBO estimates that nearly all would still end up insured) is the primary argument cited by opponents of raising the eligibility age object to the change. That people who benefit from a program like it and/or get financial rewards from it, however, is not much of an argument for refusing to accept reforms, especially with an obviously unsustainable entitlement like Medicare. Diminishing the size of the beneficiary class is likely to diminish resistance to further change, and while it's not enough, it might ultimately make reform easier.

Basically the idea is that if we reduce the number of people who get Medicare we leave the remaining Medicare with a smaller coalition behind it. Basically you've got a new version of Newt Gingrich's old concept that instead of repealing Medicare outright you create a situation in which "it's going to wither on the vine" and die.

Now on the merits I think it's weird that Suderman thinks that "people who benefit from a program like it and/or get financial rewards from it, however, is not much of an argument for refusing to accept reforms." For any given program, you've got your costs and you've got your benefits. If the people the program is supposed to help aren't actually benefitting, that's a great reason to change the program. But if they are receiving large benefits, that's a defeasible reason to avoid changes. In this particular case, every dollar of federal taxpayer money saved by throwing a 66 year-old or 65 year-old off Medicare is offset by about two dollars in increased spending elsewhere in the system. Some of that comes from employers, some from seniors, some from state governments, and some in the form of higher premiums for non-seniors. That's obviously a huge win for the health care industry, which has just doubled its revenue. But it's a very dubious benefit for the American people as a whole, especially when you consider that "65 and 66 year olds" are not some discrete class of people. Virtually everyone working and paying taxes today will be 65 or 66 some day.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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