Paul K starts us out this week with a compelling defense of Medicare, age 50 this week, against mindless right-wing attacks.
In passing, Paul points out that raising the Medicare eligibility age would “hardly save any money.” He’s talking about the federal budget here, but if one broadens the scope, as I think you should, to the whole economy, increasing the Medicare retirement age will increase, not lower, the all-in (private + public) cost of health care.
Why? Very simple: because you’re taking the youngest and healthiest people (65 and 66 year-olds) out of the lower cost, more efficient system (that would be Mcare which controls costs better than the private side; see Krugman’s numbers on this), and putting them into the less efficient, private side of the system.
That is, some current Mcare beneficiaries would remain on their employers’ plans, where they are relatively costly compared to the rest of the employer-side risk pool, instead of moving over to the Mcare, where they are relatively cheap. BTW, that’s one reason for the result Paul cites: they don’t save much because they’re less costly. You want to save bigger bucks in Mcare, throw some 80 year-olds off the program (note to Rep. Ryan et al: that’s sarcasm…pls ignore).
Of course, some of these folks would lose coverage, which is also a cost relative to the current system both in terms of their own insecurity and the costs of uncompensated care to the system when they show up in ER’s without coverage.
A few other ways raising Mcare’s retirement age raises system-wide costs:
–Shifting some 65-66 year olds over the Mcaid, increasing state costs.
–Increase premiums for those 67+ still on Mcare, based on the dynamics described above (removing relatively less expensive, younger seniors from the risk pool).
–Raising out-of-pocket costs for those who lose Mcare coverage, by an estimated average of $2.2K for about 2/3’s of them.
I’m all for fixing what’s broken in gov’t, and no question, we need to take action to shore up Mcare’s financing as we baby boomers increasingly continue to roll (schlep?) onto the system. But let’s not fix what ain’t broken by breaking it.