December 20, 2012

Another View: Extending Medicare eligibility age would help save the program


A recent editorial is a reminder of how difficult it is to reform entitlement programs once they are in place, no matter how structurally flawed, costly and unsustainable they are (Our View, "Don't change Medicare eligibility in budget deal," Dec. 12).

The Congressional Budget Office estimates that gradually extending the Medicare eligibility age from 65 to 67 to mirror what is already happening in Social Security would save $113 billion over a decade and would lower the program's cost by 5 percent by 2035. This wouldn't be major reform, but it would at least help alter Medicare's cost trajectory, which both its trustee and the CBO say is unsustainable.

The CBO notes that extending the eligibility age would require individuals who choose to retire at 65 to obtain insurance from other sources for a period, and that some individuals might be briefly uninsured. But no reform is possible without some cost, and the trade-off between some short-term costs and keeping Medicare solvent for the long term should be easy.

Lowering health care costs is a terrific idea, but simply shifting Medicare's cost to drug companies or other providers, as the editorial proposes, is no substitute for fundamental program reform. It is also useful to recall that drug companies are already on the hook for $27 billion over the next 10 years to help pay for Obamacare.

When Medicare's Trust Fund is exhausted around 2024, the fix in the form of new dedicated revenues or benefit reductions required to sustain the program will be much more draconian than any reform being proposed today.

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