Mickey Kaus is heartened by the shape of healthcare reform as it makes its way through the Senate:
Since means-testing is probably what we will need to save Social Security’s solvency–at least it is for those of us who don’t think Orszag & Co. are going to be able to bend the cost curve without degrading medical care–I’m for the Medicare-buy in.
I think that means-testing of entitlements is one of the policies we’ll need to achieve anything resembling fiscal sanity. However, I don’t see how the Medicare buy-in proposal:
1) if the “buy-in” is unsubsidized, the new 55-65s will be paying much higher premiums for Medicare than the already-in 65+ crowd, whose premiums are subsidized by the Medicare portion of the Social Security payroll tax.**
2) Eventually these younger Medicare enrollees will start to complain to their Congressmen, “Why am I paying $550 a month when these old geezers pay so much less–even though they are bigger risks?”
3) Eventually, Congress will be forced to adjust the two premiums to bring them closer to parity–i.e. force to raise the premium on older Medicare recipients;
moves that ball down the field. Contrariwise, I think that the substantial subsidies being proposed already:
WASHINGTON — Senate Democrats have provided few details about their latest health care proposal, but this much seems clear: Anyone who wants to buy the same health benefits as members of Congress, or to buy coverage through Medicare, should be prepared to fork over a large chunk of cash.
According to the Congressional Budget Office, a family of four earning $54,000 in 2016, when the health legislation is fully in effect, would be eligible for a subsidy of $10,100 to help defray the cost of insurance under the health legislation being debated by the Senate. By then, one of the most popular federal plans, a nationwide Blue Cross and Blue Shield policy, is projected to cost more than $20,000.
signal a somewhat different intention. If the Medicare buy-in proposal is enacted I would foresee increasing subsidies becoming available rapidly for those buying in and the threshold age at which buy-in is possible falling. You can’t get to solvency that way but it is a way to arrive at a de facto single-payer system.
Remember, the raison d’être for Congressmen is neither balancing the budget nor healthcare for all but getting re-elected. By their fruits ye shall know them. Since raising the premium for older Medicare recipients is unlikely to get many votes from people who actually vote, I think that suggesting that the Medicare buy-in is some sort of stealth budget-balancing move is far-fetched, indeed.
Kaus presumes and relies upon inter-generational rivalry between the old and almost old. Does he really think people 55-65 are going to get upset and demand that the premiums be higher for themselves in one to nine years? This was possibly the most nonsensical thing Kaus has ever written.
Shorter version: Why does AARP open membership at age 50?
I think he’s presuming that the threshold age for Medicare buy-in will fall fast which I agree is a likely outcome if Medicare buy-in is allowed at all. Why he also shouldn’t presume that the subsidies will get wider and deeper, too, is the part that baffles me.
Countries that means test national old age pensions (for example) certainly have less problems with FUNDING it than we do, but you then introduce a work discouraging tax bracket. A perfectly able-bodied 60 yr old on Canada’s old age pension has little incentive to make more than about 5k a year lest they be subject to a 50% tax rate for every dollar they make over that.
Of course, Dave, the medicare plan discussed a year ago proposed allowing 62-64 years olds to sign up for Medicare. It’s already expanded.
I’m looking at the December ’08 CBO report on that proposal to see where they come up with the $7,600 figure and I can’t tell. They mention the problem of adverse selection, but believe it’s a small problem when dealing with a small slice of the population (62-64) who have similar health issues. They are more concerned that the proposal will encourage people to retire earlier, creating more SS outlays, and imposing the financial risks on people who retire without adequate savings for the remainder of their life.
But largely they assume that enrollees will be charged the cost of the projected outlays, plus five percent administrative charges. And if the predictions are incorrect by the time they hit 65, the overage will be recouped by charges over the next 20 years. I assume this would be enforced by the power to setoff social security payments. I’ve not seen the recaputure mentioned, but clearly its a powerful tool to keep the actual program budget neutral, though dangerous at the same time.
http://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-HealthOptions.pdf
AHIP puts the national average premium for single coverage at ages 60-64 at $5,755. I could have sworn it was twice that.
OK, AHIP is based upon a survey of current premiums.
If the House bill passes, the average insurance premium for those 55 to 64, would be $10,617 without any subsidies other than a 5:1 age rating limitation.