ROCKABILLY RULES

ROCKABILLY RULES
The Rockin Johnny B

Friday, December 7, 2012

Raise the Social Security Age

Trade-offs in raising Medicare eligibility age


By RICARDO ALONSO-ZALDIVAR    The Associated Press 
 
 WASHINGTON — Americans are living longer, and Republicans want to raise the Medicare eligibility age as part of any deal to reduce the government’s huge deficits.    

But what sounds like a prudent sacrifice for an aging society that must watch its budget could have some surprising consequences, including higher premiums for people on Medicare.    



Unlike tax hikes, which spawn hard partisan divisions, increasing the Medicare age could help ease a budget compromise because President Barack Obama has previously been willing to consider it. A worried AARP, the seniors’ lobby, is already running ads knocking down the idea as a quick fix that would cause long-term problems. House Democratic Leader Nancy Pelosi, D-Calif., doesn’t like it either.     

But for Republicans seeking more than just tweaks to benefit programs, raising the current eligibility age of 65 has become a top priority, a symbol of their drive to rein in government. If Obama and the GOP can’t agree soon on a budget outline, it may trigger tax increases and spending cuts that would threaten a fragile economic recovery.     

Increasing the eligibility age to 67 would reduce Medicare spending by about 5 percent annually, compounding into hundreds of billions of dollars over time. But things aren’t that simple.     

“This is a policy change that seems straightforward, but has surprising ripple effects,” said Tricia Neuman, a leading Medicare expert with the nonpartisan Kaiser Family Foundation. “It’s a simple thing to describe, and the justification is that people are living longer, but I don’t think people have thought through the indirect effects.”     

Among the cost shifts identified in a Kaiser study:    

1.  Higher monthly premiums for seniors on Medicare. Their costs would go up because keeping younger, healthier 65- and 66-yearolds out of Medicare’s insurance pool would raise costs for the rest. The increase would be about 3 percent when the higher eligibility age is fully phased in.     

2.  Higher premiums for private coverage under Obama’s health overhaul. That’s because older adults would stick with private insurance for two extra years before moving into Medicare. Compared with younger adults, they are more expensive to insure.     

3.  An increase in employer costs because older workers would try to stay on company insurance plans.     

4.  Higher out-of-pocket health care costs for two out of three older adults whose entry into Medicare would be delayed.     

The Congressional Budget Office has also projected an increase in the number of uninsured.

As usual, the budget folks don't see the bigger picture.  Just because you raise the eligibility age doesn't necessarily mean a savings automatically happens.  Quite the opposite when you figure in the overall costs of doing so.  

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