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Many Trade-Offs in Raising Medicare Eligibility Age

December 7, 2012
The Intelligencer / Wheeling News-Register

WASHINGTON (AP) - Americans are living longer, and Republicans want to raise the Medicare eligibility age as part of any deal to reduce the government's huge deficits.

But what sounds like a prudent sacrifice for an aging society that must watch its budget could have some surprising consequences, including higher premiums for people on Medicare.

Unlike tax hikes, which spawn hard partisan divisions, increasing the Medicare age could help ease a budget compromise because President Barack Obama has previously been willing to consider it. A worried AARP, the seniors' lobby, is already running ads knocking down the idea as a quick fix that would cause long-term problems. House Minority Leader Nancy Pelosi, D-Calif., doesn't like it either.

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President Barack Obama must reach a deal with congressional Republicans to avoid taking the federal government over a “fiscal cliff.”

But for Republicans seeking more than just tweaks to benefit programs, raising the current eligibility age of 65 has become a top priority in the quest to rein in a costly government's out-of-control spending. If Obama and the GOP can't agree soon on a budget outline, it may trigger tax increases and spending cuts that would threaten the attempt at an economic recovery.

Increasing the eligibility age to 67 would reduce Medicare spending by about 5 percent annually, compounding into hundreds of billions of dollars over time. But things aren't that simple.

"This is a policy change that seems straightforward, but has surprising ripple effects," said Tricia Neuman, a leading Medicare expert with the Kaiser Family Foundation. "It's a simple thing to describe, and the justification is that people are living longer, but I don't think people have thought through the indirect effects."

Fact Box

LIVING LONGER

U.S. life expectancy has risen by about eight years since Medicare was created in 1965.

Among the cost shifts identified in a Kaiser study:

The Congressional Budget Office has also projected an increase in the number of uninsured. That possibility becomes more real with populous states like Texas saying they won't accept the Medicaid expansion in Obama's health overhaul, which would provide coverage to low-income adults. Then there's the impact on people with physically demanding jobs, for whom extending their working years may be difficult.

Still, the idea isn't going away.

Polls show that many Americans are willing to consider raising the age at which people become eligible for Medicare benefits as part of a plan to reduce deficits, even if on the whole it's still unpopular.

During the 1980s, Republican President Ronald Reagan and Democrat congressional leaders agreed to gradually increase the age for receiving full Social Security benefits from 65 to 67. But they didn't touch Medicare eligibility.

Since then, some policy experts have advocated aligning the Medicare and Social Security eligibility ages through a gradual phase-in that would spare those close to retirement.

The idea gained new life when Republicans won the House in 2010, and Budget Chairman Paul Ryan, R-Wis., embraced it. Obama indicated he was open to it during budget talks with Republicans in 2011. But the president quickly retreated, and now says he's not willing to consider cutting Medicare unless Congress agrees to raise taxes on the wealthy.

The No. 2 Democrat in the House, Maryland Rep. Steny Hoyer, says raising the eligibility age and other cuts "clearly are on the table," although he doesn't see much chance for them if Republicans don't yield on taxes.

For his part, House Speaker John Boehner, R-Ohio, has relented from pursuing other major changes to Medicare, such as privatization. But when it comes to the eligibility age, he is still pushing.

AARP and other groups representing older adults are mobilizing against it.

"We are prepared to oppose this one pretty strongly," said AARP legislative policy director David Certner. "It's a pretty big deal."

 
 
 

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