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Friday, October 28, 2016

According to a new report from the Congressional Budget Office, one of the most frequently pushed plans to reduce the federal budget deficit would barely yield any actual savings at all.

This month, the CBO revised its estimate of the budgetary effects of raising the Medicare eligibility age from 65 to 67. While the CBO had estimated in 2012 that raising the eligibility age would save the federal government $113 billion over 10 years, it now estimates that the reform would save only $19 billion over the next eight years. That difference of almost $9 billion per year is, of course, massive.

The changed estimate is based on a new analysis of 65- and 66-year-old Americans. As Paul Krugman explains in The New York Times:

The basic reason is selection bias: Many seniors get Medicare before 65 because of disability or specific medical conditions. The ones who have to wait until the headline age are, on average, relatively healthy and hence relatively cheap.

Additionally, many of these seniors are expected to still be working and receiving employer-provided health insurance by the time they become eligible for Medicare, further reducing their cost to the federal government. As a result, the CBO slashed its estimate of how much 65- and 66-year-olds would cost the program by 60 percent compared to its 2012 prediction.

The political impact of the CBO’s new report should be seismic. Republicans have long pushed raising the eligibility age as an element in their plans to further reduce the already plummeting deficit. In 2011, President Obama reportedly agreed to it as part of his ill-fated “grand bargain” with House Republicans, over the strenuous objections of liberals who argued that the plan was horrible economics.

Republicans can safely be expected to propose the reform again in the upcoming budget conference; this time, however, liberals have hard, non-partisan evidence with which to push back.

Photo: [email protected] via Flickr

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  • Try lowering it.
    Instead of waiting for the geezers to retire & get thrown on the backs of the US taxpayers why not let EVERYONE sign up for Medicare. Then they could use the revenue to fund the program for everyone forever.

    • RobertCHastings

      Great idea, and that was what Congressional Democrats who supported the single-payer system proposed. It is the system, basically, that many of our international allies use to provide healthcare for their citizens, and in the process spend less per capita on universal healthcare and get better outcomes than we do. Among the 25 or so wealthiest advanced countries, the US is NOT among the top in terms of longevity and overall health, although the US spends, in terms of GDP, far more than ANYONE else on healthcare. And another benefit of the single-payer system is far fewer deaths from treatable issues attributable to lack of health insurance and far fewer bankruptcies attributable to the same cause.

    • kduble

      That’s what Michael Moore proposed — lowering the eligibility age to zero. This would, of course, have no effect on the revenue of a program already headed for bankruptcy, while it would increase outlays. We still need to address revenue in the equation.

      • nirodha

        That’s true. It could be done by uncapping FICA and reducing the military budget by about 25%.

        • kduble

          Except that it has it’s own funding stream — 1.45% of the payroll tax, with employer match, and no cap. They could fix the problem permanently by hiking the tax. If they did that tomorrow without saying anything, most people wouldn’t even notice.

      • You don’t see the parallel between offering Medicare to any age group & HOW the private payers make their money do you. Let me explain:
        Insurance companies charge you premiums using Risk Based Experience that is if your company is all young people fewer claims get sent in so the premiums are lower.
        With an older workforce the claims are higher so are the premiums.
        Medicare could modify their structure so that they collect more funds from a younger crowd that doesn’t make a lot of claims (free money). That’s how the for profits do it.
        The horrible part of healthcare insurance is that an individual is with private companies all through their career, the insurance company reaping the profits. THEN when the participant reaches the age where claims start to come in (65) they dump them on the tax payer.
        Not fair to the taxpayer is it; they also pay into Medicare a lot less for coverage than they would to a private payer.
        So maybe, just think about it, Medicare could behave as a real healthcare insurance company BUT instead of sending profits out to ‘investors’ as dividends put them back into the system reducing participants cost of premiums.

        • kduble

          You’re correct. Private insurers have always skimmed the cream, while leaving the costly senior population to Medicare.

        • Jim Myers

          I Zheet M’Drawz –

          Your comments are the most logical solution to the healthcare problems we are facing that I have seen yet.

          Good Job!

        • kmkirb

          Plus, isn’t Medicare’s administrative costs only like 3%, the lowest of all around? Same for the VA Admin. Dept.

    • highpckts

      Geezers??? What a S@@t you are!! I hope you have found a way to never grow old!

      • Allan Richardson

        Lots of ways if you want to take them: pills, poison, guns, ropes, looking like an Arab at a Klan or Tea Party rally…

      • nirodha

        Hey, lighten up! Growing old can be cool! And it temporarily beats the alternative!

    • Jim Myers

      Like it or not, you, and everyone else, will become the “Geezers” you complain about.

      Unless you die young.

      Of course, you could CHOOSE not to become a “Geezer.”

      I wouldn’t recommend it, but it is your choice.

      • Dominick Vila

        The more I read about GOP proposals on the issue of healthcare the more convinced I am that their eventual proposal will be a final solution such as Sarah’s death panels.
        Having said that, Zheet’s idea – hyperbole aside- has merit, and it is consistent with what many of us supported when the healthcare debate began.

        • Jim Myers

          I agree. And, after reading Zheet’s comment, my response to his comments appear to be rather harsh.

          My apologies, Zheet.

    • Jim Myers

      I Zheet M’Drawz –

      I now realize your comment was not a criticism of ObamaCare, but rather a rational response to a rather complex problem.

      My apologies.


  • stcroixcarp

    The republicans are counting on the people between the ages of 65-67 who die before age 67 without receiving any medicare benefits at all. That’s were the savings will happen.

    • Allan Richardson

      As well as a stimulus for their friends in the funeral industry.

  • RobertCHastings

    It should have been a no-brainer to begin with. Krugman’s analysis, as always, is clear, uncomplicated, and verifiable. He doesn’t have to rely on hype or plain lies, simple facts and logic suffice.

  • People still don’t get it! There is a witch hunt carrying out by a bunch of Republicans / Teaparty against the poor, the minority, the children and the elderlies. And they will never stop unless the people cease the power of these witch-hunters. And they can only do that at the polling places. It’s either the people survive or the witch-hunters, the people must choose!