Here Comes Trouble: Stories from My Life

"Outstanding…Moore Triumphs! Publishers Weekly

Mike & Friends Blog

Dean Baker

Dean Baker is co-director of the Center for Economic and Policy Research

September 12th, 2011 5:39 PM

Does President Obama Want to Impose a Crushing Burden on Our Children?

Sorry deficit fanatics, this one has nothing to do with the cost of the stimulus or the deficits run-up during the Obama years. We're talking real money here. We're talking about plans to raise the age of Medicare eligibility to 67.

To deficit hawks everywhere this is a great way to save the government money. Life expectancy at age 65 is roughly 20 years. Therefore raising the age of eligibility for Medicare by two years would shave roughly 10 percent off the program's budget. (The actual saving would be somewhat less since it is cheaper to treat people when they are 65 and 66 than in their 80s or 90s.) For a program that is projected to cost more than $1 trillion a year (at 5 percent of GDP) in a decade, and even more in following decades, this would amount to real savings.

But the cost of this savings is a much higher health care bill for beneficiaries. As it is now, millions of people in their 60s struggle to hang onto jobs that provide health care insurance or do without, hoping that they can make it until 65 without a major medical problem. This proposal pushes the magic age out two more years.

And there should be no mistake; the cost of insurance for someone in his/her mid-60s is a real burden. The Congressional Budget Office (CBO) projected that the cost (in 2011 dollars) of insuring someone in the private sector at age 65 will be $15,500 a year in 2022.

This would be roughly equal to the average Social Security benefit for someone turning age 65 in that year. In other words, for the majority of workers who will have retired by age 65, the proposal to raise the age of eligibility to 67 implies that they will have to spend more than half of their income on health care.

The situation will be considerably worse for the large number of beneficiaries who have pre-existing conditions. They can expect to pay two or three times as much for their health insurance. In principle, President Obama's health care plan should prevent insurers from discriminating based on pre-existing conditions, but the smart money isn't betting on that one right now.

Many, or perhaps most, 65-year olds will qualify for Medicaid, so they may still be able to afford health care. However, the quality will almost certainly be worse, since Medicaid generally provides lower quality care.

This raises two additional issues. Instead of guaranteeing middle-class workers decent health care in their old age, we will be telling them that they will have to rely on a program that was intended to provide health care to poor people. So people who spent decades working as school teachers, firefighters, and in other middle-class occupations will need to turn to an anti-poverty program to get health care in their older years.

The other issue is even more disturbing. By switching people age 65 and 66 from Medicare to private insurance we will be hugely raising the cost of insurance for the country as a whole. Medicare is the most efficient part of the national health care system. It both saves money on administrative costs and is more effective in holding down payments to providers than private insurers.

Based on CBO's analysis of the Paul Ryan plan, my colleague David Rosnick calculated that raising the age of Medicare eligibility to 67, beginning in 2022, would increase the cost of health care to seniors by $3.9 trillion over Medicare's 75-year planning horizon. However, only $1.3 trillion of this cost would be savings to the government. The rest, almost $2.7 trillion, would be the additional cost of providing health care through the private health care system rather than Medicare. (All numbers are in 2011 dollars.)

In other words, the proposal to raise the age of Medicare eligibility to 67 is a proposal to increase health care costs to our children and grandchildren by $2.7 trillion. The idea that this cut is being presented as somehow helping our children is a sick joke that would only be taken seriously in Washington political circles.

The reality of health care costs is simple. We have two choices. We can fix our health care system and get payments to providers down to reasonable levels, as every other country in the world has done. Or, we can protect the insurers, the pharmaceutical companies, the hospitals, and the highly paid medical specialists, and tell people that they will have to do without care.

The proponents of raising the age of Medicare eligibility are clearly in the "do without care" camp. This group is a small but powerful minority. Let's see if they can buy this proposal into law.


Follow Dean Baker on Twitter:

You must log in to comment.

You must be logged in to leave a comment. Log in | Register

FBI Uncovers Al-Qaeda Plot To Just Sit Back And Enjoy Collapse Of United States WASHINGTON—The FBI announced today that it has uncovered a...

Apr 15th
3:28 PM
Read More

Revealed: Rahm Emanuel's top donor bought stock in Marriott just before it was awarded huge contract As schools are closed and pensions cut,...

Apr 9th
2:00 PM
Read More

I'll be at First Time Fest today in New York City at the screening of my first film, Roger & Me. Loews Village 7 at 12:30 pm. Come see it on the big...

Apr 5th
9:48 AM
Read More

Revealed: Rahm Emanuel cuts public pensions, diverts money to benefit campaign donors If you've read the financial news out of Chicago the last...

Apr 4th
2:19 PM
Read More

Please take a moment today to think of Casey Austin Sheehan, son of Cindy and Patrick, who was murdered by U.S. foreign policy in Sadr City, Baghdad ten years...

Apr 4th
2:00 PM
Read More

ICYMI - I've joined this "thunderclap" to support the Connecticut legislators who voted yes on last year's Act Concerning Gun Violence...

Apr 3rd
7:38 PM
Read More

I've joined this "thunderclap" to support the Connecticut legislators who voted yes on last year's Act Concerning Gun Violence Prevention...

Apr 2nd
8:27 PM
Read More

I am opposed to the death penalty, but to every rule there is usually an exception, and in this case I hope the criminals at General Motors will be arrested...

Apr 1st
3:55 PM
Read More

How Long Some in the US Will Survive Under New Health Law Donna Smith Those who must access care to live and can afford it are not...

Mar 31st
10:13 PM
Read More

Last night, The Good Wife on the East Coast started 40 minutes late due to the overrun of the NCAA basketball game. If you had your DVR set for the show, you...

Mar 24th
5:41 PM
Read More

Watching films today, looking for the ones I'm going to pick for my film festival this summer. I (and a whole bunch of others!) have this thing we put on...

Mar 23rd
4:48 PM
Read More

When the U.S. Health Care System Keeps Killing, Who Cares Enough to Fight? Donna Smith We have largely forgotten that people are at...

Mar 21st
5:56 PM
Read More

Tell the White House not to give up on Dr. Vivek Murthy's nomination as Surgeon General despite the ferocious opposition from the NRA: Don't give...

Mar 21st
5:38 PM
Read More

This criminal would never see a jail cell, nor would his cronies. In fact, they'd later be rewarded with re-election: Presidential Address on War with...

Mar 19th
9:40 PM
Read More

The crime of the century -- our invasion & slaughter in Iraq -- started 11 years ago tonite in this 7pm (ET) hour, March 19th, 2003: CNN Coverage of...

Mar 19th
9:08 PM
Read More

Washington’s Back-to-the-Future Military Policies in Africa Nick Turse Nick Turse is an award-winning journalist, historian,...

Mar 17th
4:59 PM
Read More

"I think democracy is the most revolutionary thing in the world." -- Tony Benn, 1925-2014 Tony Benn in 'Sicko'

Mar 14th
10:07 AM
Read More

RIP Tony Benn, one of the UK's greatest leaders: Tony Benn, veteran Labour politician, dies aged 88 Former cabinet minister died at...

Mar 14th
9:53 AM
Read More

Please read this important story from K. Ford K.: Am I the Face of the New American Middle Class? I began to feel I had slipped so low...

Mar 13th
2:24 PM
Read More

Yesterday Dianne Feinstein revealed that the CIA has been spying on the Senate Intelligence Committee. This is all about the report the committee has produced...

Mar 12th
6:48 PM
Read More

Health Care for All Colorado has brought Mercy Killers, a show written and performed by Michael Milligan about our murderous for-profit healthcare system, to...

Mar 10th
1:08 PM
Read More

Health Care Dramas that Sting and Why We Have to Watch Donna Smith The realities Milligan has written into the show cut deep into...

Mar 10th
1:02 PM
Read More

Did you know the Lehrer Newshour on PBS has been produced for 20 years by a company owned by conservative cable billionaire John Malone? Me neither. After...

Mar 7th
8:39 PM
Read More

Mr. Obama, if int’l law is so damn crucial . . . | The Russian intervention deserves criticism. But let’s be clear. The...

Mar 6th
1:21 PM
Read More

Enron billionaire John Arnold thinks everyone should believe him when he says we've got to cut pensions because he's so incredibly rich: John...

Mar 5th
4:20 PM
Read More

More in David Sirota's continuing series on the billionaire takeover of PBS: More PBS conflict woes as activists move to eject David Koch from board of...

Mar 3rd
12:35 PM
Read More

Ukraine: One ‘Regime Change’ Too Many? Ray McGovern Is “regime change” in Ukraine the bridge too far for the neoconservative...

Mar 2nd
9:25 PM
Read More

Latest from David Sirota on Enron billionaire John Arnold smuggling anti-pension propaganda into "neutral" institutions like PBS and now, the...

Mar 1st
12:58 PM
Read More

Second Guessing a Life: US Health Care System Robs Security and Human Dignity Donna Smith The dysfunction of the US health care system...

Feb 27th
1:40 PM
Read More

Subscribe to Mike's Blog RSS

Click here to suggest an article

Mike's Blog

See More Blogs

Vew the archives

View older articles