Chris Christie dangles the keys

April 17th, 2015 at 12:53 pm

As I stressed on CNBC this AM, Chris Christie’s entitlement plan is not a good plan. It is instead a classic “key dangle” (“look over here, not over there!”), as the folks at Vox nailed yesterday,

–While all the attention has been on benefit cuts for wealthier recipients, that part by itself does very little in terms of boosting the program’s long-term solvency.

–He gets his solvency bucks from raising the retirement age, and that is an across-the-board cut for affected retirees. As my CBPP colleagues noted: “Raising the retirement age amounts to an across-the-board cut in benefits, regardless of whether a worker files for Social Security before, upon, or after reaching the full retirement age.  A one-year increase in the full retirement age is equivalent to a roughly 7 percent cut in monthly benefits for all retirees who are affected.”

–Given that the increase in longevity has been concentrated among higher income elderly, the incidence of this benefit cut is particularly pernicious to those who need Social Security benefits the most.

–Which, by the way, is most elderly: 2/3 of Soc Sec beneficiaries depend on the program for half of their income; for 1/3, it’s 90% of their income. That also why these means-testing ideas targeting the wealthy don’t do much to boost solvency; to really make a difference, you’d have to whack retirees who very much depend on this income source. (This seems a good place to mention the Soc Sec is fully solvent for 18 more years; after that, if we do nothing–and woe betide us if that’s the case–benefit payouts would have to fall by 25%.)

–Raising the Medicare eligibility age is another bad Christie idea. It saves money for Medicare but actually raises national health care costs. Why? Because you’re taking the youngest, healthiest seniors out of the more efficient program, and passing them over to the less efficient private system, where they’re relatively older, sicker, and more costly.

–Finally, his idea for a per-capita cap on Medicaid, as Catherine Rampell points out today, whacks another group of vulnerable people:

Limiting federal funding on Medicaid spending would indisputably accomplish one objective: Limiting federal funding on Medicaid spending. But that’s it. It won’t make the growing costs of the program magically disappear. It would just dump them onto someone else’s doorstep, in this case the states’, which are likely less equipped to deal with complex management and cost control given their smaller scale. State governments would either have to contribute more of their own funds or, more likely, institute deep cuts to poor beneficiaries and the providers that serve them. Medicaid already spends so little per beneficiary — about 27 percent less for children, and 20 percent less for adults, than private insurance does on similar patients — that further cuts would almost certainly cause providers to exit the program, reducing access to care.

I don’t know where Gov. Christie stands on the estate tax repeal, but this week’s Republican agenda, including his own, appears to be based on the realization that what’s hurting America is that there’s just too damn much retirement and health-care security being enjoyed by the low-income elderly and the poor, and b) the richest estates aren’t rich enough.

But hey, good for them for making the “hard choices!”