Thursday, November 15, 2012

Tying Medicare Reform Into Obamacare

Robert Kuttner comments on Medicare reform proposals:
The White House, however, has dropped hints that Medicare could come in for cuts, specifically an increase in the eligibility age. This is a really bad idea. The administration has already imagined that it will be able to cut Medicare by nearly a trillion dollars without cutting services, in order to finance Obamacare. Republicans railed against these cuts in the campaign. Any further Medicare cuts are a terrible idea.

Long-term reform of Medicare is necessary, and is a daunting project. But it doesn’t belong in this budget deal.
I agree with Kuttner that, as things presently stand, increasing the eligibility age for Medicare is likely to prove to be bad policy. A lot of people hold off on obtaining medical care until they qualify for Medicare, and making people wait a few years longer is likely to both increase the number of people who have unmet medical needs as they enter Medicare and the cost of treating some of those illnesses and disorders. It's not clear that the government would end up saving any money, or at least not an appreciable amount.

Looking at political reality, though, you're going to see any "increase in age" legislated in the same manner as the Romney-Ryan voucherization plan - it will be something that affects a class of future retirees, not those who are presently at or near retirement age. That means first that the change is likely to be scheduled to take effect under a different President, but also that Congress will be staring down the next set of people who are near retirement age when they actually implement the change.

So, how about that "Obamacare" thing?

Let's say that the future deal is that the age for eligibility in Medicare is bumped up by three years. Not so good for unhealthy near-retirees, right? Except if things work out as planned, those near-retirees will have health insurance - likely with companies that would just as soon dump them onto Medicare. If the eligibility age is increased but that class of seniors is permitted to buy into Medicare, those who would presently be left high and dry by a raising of the eligibility age may be able to obtain Medicare courtesy of the subsidies made available through "Obamacare". If the trade is "We'll raise the Medicare eligibility age by three years, starting in [the future], as long as affected seniors can buy into Medicare," most seniors should be reasonably covered through that transition period.

There's also an element of "put up or shut up" involved for the Republicans. If the private markets can compete with Medicare, providing the same or better service at a cost savings to enrollees, then insurance companies should be lining up to serve near-retirees during the years leading up to their Medicare eligibility. If that in fact happens, great! If the Republicans are afraid to go there... well, what does that tell you?

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