Ways Medicare May Change for Today’s Seniors, Part 2
Friday, August 24th, 2012
The last post looked at a claim by Republican presidential candidate Mitt Romney, that policy changes he is proposing for Medicare won’t affect today’s seniors. As the last post explained, some of Mr. Romney’s proposals could affect Medicare for today’s seniors quite a bit. If the Affordable Care Act is repealed, as Mr. Romney promises, today’s seniors could find themselves with higher premiums and reduced benefits, especially for prescription drugs. And the Medicare trust fund could be severely depleted by 2016.
There are a couple of other changes to Medicare on the table that might affect today’s seniors. These are means testing, or requiring wealthier seniors to pay more in premiums and co-pays for Medicare; and raising the age of Medicare eligibility from 65 to 67. Neither Mr. Romney nor President Obama lists these changes as policy proposals on his campaign website. But Mr. Romney has endorsed both ideas in some of his speeches, and President Obama has said in the past that he is open to both ideas.
In other words, one or both of these proposals could become law no matter which man is elected president in November, although in the past more Republicans have supported these proposals than Democrats. Even so, citizens who care about the future of Medicare — whether they are healthy or afflicted with life-threatening disease such as mesothelioma — should be paying attention and understand what impact these changes might have.
Let’s look at means testing first, because it’s the sort of change that might be phased in quickly enough to affect people on Medicare now. Asking wealthier seniors to pay higher Medicare premiums only sounds fair, especially since the program is struggling to stay funded.
The argument against means testing is, first, that it would require seniors to report their financial status to Medicare before they could receive or renew benefits. As it is now, you get benefits as soon as you are old enough, period. It’s much simpler. Means testing might actually increase Medicare’s operating cost by creating more paperwork.
Second, critics of means testing say there aren’t enough wealthy seniors to make that much difference in Medicare funding. It would be much simpler and more effective to just ask wealthier people to pay higher taxes into the Medicare trust fund, they say.
Now let’s look at raising the eligibility age. Raising the eligibility age wouldn’t affect people on Medicare already, of course. But could it impact people who are approaching Medicare age now? Republican vice presidential candidate Paul Ryan has proposed raising the eligibility age by two months every year, beginning in 2013. Some economists say that the eligibility increase would have to be phased in much more quickly than that to keep Medicare funded.
The Congressional Budget Office estimates that raising Medicare eligibility to age 67 would save the federal government $148 billion over ten years. Sounds good! But that bad news is that the change would place a bigger burden on seniors and other parts of the economy.
Unless some other provision is made for the 65- and 66-year-olds, many in that group would have to pay a great deal more for insurance than they would pay for Medicare, assuming they can pay at all. Some would fall back on Medicaid, which would place a greater burden on that program. Many would postpone retirement to get employee benefits longer, but having more older people in the employer group plan risk pool would raise the cost of employee benefit insurance.
In other words, while raising the eligibility age would save the Medicare program some money, it would do so by shifting the cost burden elsewhere in ways that might do our economy, not to mention seniors, more harm than good. Ultimately, what needs to be done to save Medicare is find ways to control the nation’s health care costs, and neither proposal would help with that.
