Obamacare

Raising Medicare's Retirement Age Won't Save That Much Money. It's Still A Good Idea.

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Mercatus Center economist Arnold Kling explains why raising Medicare's eligibility age by just a few years won't save a whole lot of money:

The reason that raising the age of eligibility for Medicare does not produce a large effect is the phenomenon of "morbidity compression." Basically, no matter how long you live, if you die a natural death, most of your health problems will be concentrated in roughly the last three years of your life. Bad problems kick in at around 72 for people who die at 75, and at 92 for people who die at 95. These days, if you make it to age 65, there is a good chance you will not have really expensive medical problems until you are in your late 70s, so raising the age of government dependency for health care does not do much to reduce Medicare's cost.

According to the Congressional Budget Office, slowly phasing in a shift from today's Medicare eligibility age of 65 to an eligibility age of 67 would save about $125 billion over the next decade. That's not circus peanuts. But given that in 2010 Medicare spent a little more than $500 billion and is projected to spend almost $1 trillion annually by 2021, it's not exactly a fiscal game-changer. Instead, it would put a solid point or three on the deficit-reduction board. Overall, however, the program would still be zipping merrily down the road toward insolvency.

Even still, there are good reasons to raise the program's eligibility age anyway. For one thing, as the Center for a Responsible Federal Budget noted in June, one of the reasons that spending on Medicare is expected to rise so dramatically is that the Medicare population is growing older. As that happens, it makes sense to concentrate public resources on the older population. It would also encourage individuals to work and be productive for longer, which should happen as lifespans extend further. 

There's also a political argument for raising the eligibility age: It could help make it easier to truly transform the program. One of the reasons that Medicare is so difficult to reform, despite its well-known broken finances, is the size, commitment, and influence of the coalition of beneficiaries. As Kling argues, "reducing the proportion of the population on Medicare would help to lower the political rigidity that surrounds it." Raising the program's eligibility age, then, is a reform that could pave the way for bigger, better reforms—and help demonstrate that structural changes to the program wouldn't be painful as some people seem to think. 

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  1. If you look at poulation trends, at the peak of the baby boom (1957) there were 4,308,000 live births in the US.

    In 2009, there were 4,131,019 live births in the US.

    That means just a difference of 176,981 births. Now I keep hearing shit like in 2030 there will be just 2 workers for every retiree on SS and I think to myself, that’s bullshit.

    1. Re: Gibby,

      That means just a difference of 176,981 births. Now I keep hearing shit like in 2030 there will be just 2 workers for every retiree on SS and I think to myself, that’s bullshit.

      You fucking idiot – it is not like retirees only live for exactly one year after starting to receive S.S.

      1. Say a kid today starts work at 22 and works until 65. That means he will be working for 43 years or until 2054.

        Say a geezer today starts retirement at 65. In 43 year, he’ll be 98.

        Which of the two are more likely to make it the full 45 years?

        The rate of live births in the USA more than offsets the number of retirees on SS.

        1. Correction, the geezer would have to make it to 108.

          1. Two things:

            If the youngsters are contributing 10K per year and the oldsters are spending 30K per year then it matters.

            Also, look at the last column in the chart you linked to. In 1957, the birth rate was 25% of the population. In 2009 it was only 13%. So you have many more people now that will go on S.S. and fewer people as a percent of the population paying in.

            1. Actually, it’s gone down from 2.5% of the population (25 live births per 1000 population) to 1.4%. But your point still holds.

        2. umm, not everbody works. factor in actual employment figures rather than the imaginary ones you just made up and you’ll see we’re alot closer to 2:1 than 3:1 or more with our trajectory.

    2. People live longer now.

    3. It’s about percentage of live births against population totals: 171,984,130 vs. 311,996,000.

      1. Social Security sez:

        The line chart shows the ratio of covered workers to beneficiaries from 1955 to 2085. In 1955, there were 8.6 workers supporting each retiree. By 1975, that ratio had declined to 3.2 workers per beneficiary and remained between 3.1 and 3.4 over the next 30 years. Current projections have the ratio starting to decline again in 2008, decreasing at an accelerating rate until it reaches 2.1 workers per beneficiary in 2031. Thereafter, it continues to decline by one-tenth of a percentage point approximately every 15 years, arriving in 2085 at only 1.9 workers per beneficiary.

        http://www.ssa.gov/policy/docs…..text.shtml

        I’ll take their word for it, assuming this is a best case scenario.

        Note that the decline from 3:1 to 2:1 represents a 50% decrease in the ratio. That’s a lot. A hell of a lot.

        1. And I say that claim doesn’t square with the live births chart.

          1. You do understand that the ratio of births to population has dropped like a rock and life expectancy has gone way up, right? Meaning there are fewer births per worker. Meaning there are fewer workers per retiree.

          2. And I say that claim doesn’t square with the live births chart.

            That’s because you’re doing the math wrong.

            current_workers = previous_workers + new_workers – new_retirees – dead_workers.

            current_retirees = previous_retirees + new_retirees – dead_retirees

            In your example, new_retirees is about equal to new_workers (and dead_workers is almost 0). The problem is that new_retirees is much greater than dead_retirees. So current_retirees is growing, while current_workers is not changing.

            1. Very nicely reasoned, some guy. Thanks for posting that.

        2. What SS fails to take into account are robot workers.

          1. Robot workers are slaves and have no income to tax… Sadly.

            1. Tax their owners!

              1. It’s robots all the way up!

                1. Robotstrapping.

        3. They should adjust retirement age so that the ratio stays between 3.0 and 3.5.

          The faster the ratio tries to adjust downward, the faster the age goes up.

          1. Okay, if not robots, what about a billion clone slaves to support us in our old age?

            No, wait, I can improve on that. Why not two clone slaves of each of us? To support us during our retirement years?

            1. I prefer robots. Clones are unethical. Always clocking in for each other and stealing silverware.

              1. Send in the clones!

            2. OK, who do we clone?

              1. Well, I was thinking we’d clone ourselves. That seemed fairest–a couple of clones to support me in my later years.

                If that doesn’t work, then clone someone famous.

          2. How about freezing the geezers when they hit their late 70’s when their medical cost start to rapidly increase. We can thaw them out when we can afford it.

            1. Freeze the geezers?

              Good Lord, you’re out of your mind!

    4. So you’re saying that your out-of-your-a$% calculation is more accurate that the projections of demographers, actuaries, etc. Ok…. You’re going to have to show your work.

  2. Mob Rule!

  3. Raising Medicare’s Retirement Age Won’t Save That Much Money.

    Still, Medicare Should Be Retired.

  4. “Although [Selma]Hayek discussed her love of yachts and private jets with Allure, she does keep it real. No cosmetic surgery for this beauty.

    “I’ve never had anything done on my face,” she said.”

    We’ll just see about that…

    1. Yeah, that’s kind of sad. I can certainly help her with that. Of course if she’s going the cosmetic route there is always foreskin…

      http://www.scientificamerican……-rest-wrin

      1. I don’t think a topical application of foreskin will work. But, I suppose in the interest of science, we should give it a go.

        1. Courage, RC. Courage.

        2. PRESENT!………ARMS!

  5. the dems should insist on means testing rather than increasing the age. this would be consistent w restoring the clinton tax rates on the wealthy…who are NOT creating [JOBZ] like taebaggers say.

    1. Serious question: Why is means testing “OK”? Doesn’t it penalize people for being successful?

      1. its a better improvment than raising the age because, as i wrote, its consistent w restoring the clinton tax rates on the wealthy.

        1. “Consistent”, perhaps, but why is the “means test” OK/fair? Why not “children test” or “friends test” or “church test”?

          1. cause it screws the fewest w the mostest

            1. cause it screws the fewest w the mostest

              Not giving Sam money =/= screwing Sam out of money.

              Try again.

      2. yes, but if social security is merely a social safety net, that’s the point. If you aren’t falling, you don’t need a net to catch you. Of course nowadays, many 65 year olds can still do the office work they did at 25. We’re no longer a nation of facotry workers or ditch diggers.

        1. “If you aren’t falling, you don’t need a net to catch you.”

          You wouldn’t believe the shit storm I started on WaPo story comments section that I started when I made that point. I also mentioned Flemming v. Nestor and the lack of a contractual right. and they still defended the program.

      3. I don’t like means testing either given that we HAVE to pay in. The reason I’m for it, however, is more philosophical. It will stigmatize social security (for future generations, I mean…not the present generation) as welfare for the elderly and thus may keep people working longer and purposely NOT applying for it.

        1. WTF you blathering about?

        2. I don’t like means testing either given that we HAVE to pay in.

          That’s the whole reason there is no means testing. Back when this whole scam got rolling, they knew it would not pass unless everyone got “benefits”. With means testing it is blatantly obvious that some people are benefitting at the expense of others.

    2. Funny – the owner of the company I work for is creating new jobs. We have fresh hires for our new division and we’re also opening a new plant down in Texas (where else?). He’s quite wealthy too.

      Or is he just a strange anomaly?

      Perhaps we would be hiring even more if demand for our various product lines was up. You know, better economy, yadda-yadda.

      1. its wonderful that plant is hiring. but you’ve seen the national numbers. fact is nationally, the wealthy are NOT creating [JOBZ] w the tax savings.

          1. So where’s the link that shows a relationship between job growth and tax rates?

            Tax rates are at historic lows, it stands to reason that job growth should be robust.

        1. given how much debt is unwinding, i’m amazed if anyone creates any net welath at all in this economy.

          I’m still pissed nobody took my advice of firing all the bank/investment firm ceos and replacing them with an army of accountants to sort through the city dump of bad loans and extract legitimate value.

      2. When I went to our company meeting last week I was 1 of 160 new hires that were introduced to the rest of the company.

    3. I have no problem with means testing on medicare or social security provided the means testing doesn’t turn into another entiltlement for the poor while the middle class get screwed yet again like with tuition assistance. If they were not taking so much of our money so poor kids can go to college (which has the double penalty of causing tuition to be much higher) we might actually be able to use some of that money to, oh I don’t know, maybe send our own kids to school.

      1. Its a welfare program/entitlement anyway, and the middle class is getting screwed anyway, with or without means testing.

        1. Oh, I agree. But since neither are going away anytime soon I would say means testing might be one reform worth looking at. Among many others.

          1. I prefer Mean Testing. In Mean Testing, only people so hard up a mean guy would give them money get welfare.

    4. Re: Double asshole,

      the dems should insist on means testing rather than increasing the age.

      Why not both?

      this would be consistent w restoring the clinton tax rates on the wealthy…who are NOT creating [JOBZ] like taebaggers say.

      First, why the Clinton tax rates? Why not the Carter tax rates, or the Truman tax rates?

      Second, why would increasing taxes help in creating jobs and if they don’t, then what was the point of mentioning the lack of job creation under the current tax rates?

      And whyam I arguing with this imbecile, anyway? I ahve better things to do. Ta-ta.

      1. You really don’t contribute enough insight per word here to justify calling people names as much as you do. Do you talk to your children with that mouth?

    5. You type like a fifth grader.

  6. Is morbidity compression solvable in any way other than usage caps?

    1. Sure. I call it bustin’ a cap in yo’ ass.

      1. fortunately that’s covered under obamacare.

        1. Medicaid now covers the cost of ammunition in city slums? Cool.

          1. Fast and Furious healthcare.

            1. As long as visits to Asian “massage parlors” are covered under Fast and Furious: Tokoy Drift healthcare.

        2. Because Obama is black, right. And once again, the racism of “libertarian” “teaParty” or whatever Republicans have to call themselves these days, leaks out

    2. Is morbidity compression solvable in any way other than usage caps?

      Nope. Death panels are the only way. The question is, “Who’s on the panel?” I would prefer if my panel consisted of me, my wife and my doctor. But I’m selfish that way.

      1. yah, that’s what your wife told me last night

        1. Ah, the internet…

      2. make sure your wife and your doctor aren’t having an affair first.

        1. If they are, I think the vote will be unanimous.

      3. I already have that job…*snicker*

    3. arsenic in the geritol

  7. I work in this area. Profoundly stupid idea. Pushing a high utilization population back into the private pool, which coincidentally is much more expensive already in general, makes a lot of fucking sense. Those savings for the system on the whole are imaginary. This is just cost shifting from one part of the system to another. Break even at best inflate private insurance growth rates even faster at worst.

  8. After last weeks 60 minutes on forging mortgage documents, I wouldn’t preclude euthanasia becoming the norm.

  9. We should lower eligibility age to 0 and say fuck you very much to the insurance mafia. The only reason we don’t have a sensible universal healthcare program in this country is because there is a powerful private industry who’d prefer to keep its profits intact, and politicians doing their bidding. Only reason.

  10. (1) Sensible

    (2) Universal

    (3) Healthcare Program

    Pick any 2!

  11. If it’s not a magic bullet that is going to fix the entire problem by itself, I don’t want to hear about it. That goes for financial policy, energy policy, foreign policy or anything else.

    1. I think we all agree that magic bullets are the answer.

      Use them to shoot old people.

  12. We should lower eligibility age to 0 and say fuck you very much to the insurance mafia. The only reason we don’t have a sensible universal healthcare program in this country is
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  13. Pushing a high utilization population back into the private pool, which coincidentally is much more expensive already in general, makes a lot of fucking sense. Those savings for the system on the whole are imaginary.
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  14. It may be time to reread C. Buckley’s Boomsday: http://en.wikipedia.org/wiki/Boomsday_(novel)

  15. I’m not necessarily against raising the eligibility age, even though I’m approaching it. Nevertheless this bothers me: It’s considered absolutely a horrible, marxist burden to ask the wealthy (of which I am a member, technically) to increase their marginal tax rate by 3%. However, it is NOT considered a horrible burden to expect people who have worked for 50 years to work for another three (a 6% increase in working years) in order to get the benefits they provided for a previous generation. And all because *statistically* they will live longer.

  16. Although raising the retirement age eliminates less than one-third of the projected deficit (http://eng.am/rtUMqX), it still eliminates some of the projected deficit! People are living longer so therefore more people are getting paid for longer periods of time while fewer people are paying into the system. Indexing the full retirement age to keep up with changes in longevity makes the most sense as average age continues to increase. However, this is just one fundamental change that needs to be made to the entitlement programs. Pairing it with other changes will help to solve the deficit crisis.

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