Killing Medicare By Pretending to Save It

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Here's precisely why raising the Medicare eligibility age appears to be the only solution to keeping the program solvent: the Republican Party, which hates Medicare and always has, and the compliant DC news media, which self-consciously dittos the Republicans so as to not appear too "liberal," say so.

And so it is.

But I probably don't need to tell you that it's really, really flipping stupid -- times a thousand. And it's simply designed to sabotage Medicare and the broader healthcare system.

During election campaigns the Republicans invariably pretend to be in love with Medicare, as Mitt Romney and Paul Ryan reminded us this year by turning the Affordable Care Act's Medicare savings into a cudgel to flog the president and the Democrats as enemies of the program when in fact the opposite is true in nearly every way. Not only did Romney inject the $700 billion savings into the discourse as a campaign issue, it practically became a centerpiece of his campaign -- not to mention one of his biggest lies. And now the same Republicans who joined Romney in this line of attack are insisting that Medicare be one of the programs on the fiscal cliff chopping block.

The idea is a familiar one. They want to raise the eligibility age from 65 to 67, and they're receiving hearty endorsements from the cynical, nearsighted and compliant DC press. For example, within a strikingly revealing Politico exposé about creating the DC elite, Jim VandeHei and Mike Allen wrote this:

They will also tell you Medicare, which is on pace to be insolvent in 12 years, is a much, much bigger mess and threat to long-term economic vitality — and much harder to solve. Yes, the rich need to get smaller benefits, but that is almost meaningless in terms of fixing it. Ultimately, many Americans will have to get less generous benefits that start to kick in at an older age — and those changes need to start a decade from now. Otherwise, the math simply doesn’t work.

This is the common wisdom. Sadly. The only way to "fix" Medicare, they say, is to stick it to regular Americans who need it the most. There's no other solution, they say, other than to protect the rich and screw the middle class. And that's precisely what they intend to do. It turns out that stripping 65- and 66-year-olds of Medicare benefits will cost those people two dollars for every dollar the government saves by keeping them out of the program.

According to the Kaiser Family Foundation, in the first year alone such a shift in the eligibility age would save the government around $5.7 billion. Sounds great! But it'll actually cost seniors and the system more than $11 billion in the first year. Matt Yglesias wrote:

That includes $3.7 billion in higher costs for 65- and 66 year-olds, $4.5 billion from employers through company-sponsored insurance, $0.7 billion from state governments, and $2.5 billion in higher average prices for third parties once younger seniors are shifted out of the Medicare risk-pool and into the general population.

And the (very liberal) Wall Street Journalagrees that raising the eligibility age is a huge mistake.

The Republicans don't really care because the goal isn't savings for the system -- the goal is to begin a trend in which every time Medicare reform comes up, raising the eligibility age becomes the standard fare. So it gets rolled back and rolled back, while fewer and fewer people are covered. Undermine and weaken the system by a thousand cuts. And, as an added bonus, the roll back trend make totally sabotages the notion of actually expanding Medicare or implementing Medicare For All.

Ironically, and in spite of what The Very Serious Republicans and Politicos, expanding Medicare to include everyone is one of several ideas that could actually help both Medicare and the broader healthcare system. By allowing everyone, especially younger Americans, to enter the system, a tsunami of new revenue enters the system from a demographic that's generally healthy and would use very little of the system's resources. Plus, Medicare operates with greater efficiency and lower overhead than private insurance, while privately doctors, hospitals and pharmaceuticals remain intact and, in some cases, prosper because everyone can receive care and pay for it.

Shy of providing Medicare For All, what about passing the public option? During the debate over the passage of the Affordable Care Act, the CBO reported that the public option would save the government $68 billion over ten years. It would further bend the cost curve and, hell, if they decided to raise the Medicare eligibility age anyway, it would at least give seniors an affordable stop gap.

Or they could simply make the Medicare tax portion of the payroll tax progressive. In other words, in the current system everyone pays a Medicare tax of 1.45 percent, regardless of income. Why not apply the Medicare tax with 1.45 percent as the minimum bracket and increase the tax for subsequently higher income brackets, while means testing wealthier Americans to discover whether they really need the same benefits as middle and working class Americans?

Of course none of this is considered to be Very Serious enough, so unless there are some loud voices telling them to cut crap, the Very Serious people in Washington appear to be moving the direction of raising eligibility age. And it'll be a disaster.

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