Posted on 11 December 2012.
It’s tempting to read these pieces by Matt Yglesias and Jonathan Chait and decide that, all things considered, liberals should at least consider raising the Medicare age to 67 as part of a budget compromise.
“This seems like a useful time for liberals to sort out the difference between budget ideas we don’t like and budget ideas we can’t or shouldn’t accept,” Chait writes. I couldn’t agree more. Put this one in the “can’t accept” column.
Here are four arguments for compromising on the Medicare age – and why they’re wrong.
Bad Reason #1: As a bone to throw to the right.
“When the question comes to what concessions the Democrats are going to have to accept,” Chait writes, ” … raising the Medicare age seems like a sensible bone to throw the right.” That’s the first bad reason to compromise. Raising the Medicare age would increase the number of uninsured Americans, and would do so for people who need substantially more care than the average person.
It would also cost more money than it saves. The Kaiser Family Foundation estimated that its $ 5.7 billion in projected Federal savings would lead to an additional $ 11.4 billion in health spending elsewhere in the economy.
More uninsured Americans? Higher healthcare costs? That’s not bone. It’s meat.
Bad Reason #2: To protect the Affordable Care Act.
“Raising the Medicare retirement age would help strengthen the fight to preserve the Affordable Care Act,” Chait writes. He argues that “a side effect of raising the Medicare retirement age would be that a large cohort of 65- and 66-year-olds would suddenly find themselves needing the Affordable Care Act to buy their health insurance.”
There’s something seriously wrong about the cost/benefit logic in Chait’s position, and the moral logic too. Do we really want to put a segment of our population in distress in order to provide artificial political support for a health reform law that needs substantial strengthening?
Yes, says Chait, because “Republicans attacking the Affordable Care Act would no longer be attacking the usual band of very poor or desperate people they can afford to ignore but a significant chunk of middle-class voters who have grown accustomed to the assumption that they will be able to afford health care.”
That’s a little like saying Democrats should cheerfully accept natural disasters because they build support for FEMA.
Bad Reason #3: Because Medicare has symbolic value.
Medicare “has weirdly disproportionate symbolic power,” Chait writes, “both among Republicans in Congress and establishmentarian fiscal scolds.”
Yes, it does – and conservatives have consistently been more effective than liberals in reframing both the terms of debate and the public’s perception of the economy. Here we go again: By cutting Medicare, Democrats would be “acknowledging” – falsely – that it’s a burden on society, an ineffective program, and a drain on economic growth.
Medicare’s “symbolic power” is an argument for strengthening it, not cutting it.
Chait goes on to say that “Mitch McConnell and Erskine Bowles alike would regard raising the retirement age as a sign of serious belt-tightening and the ‘structural reforms’ conservatives say they need.”
Yes, and so would our sadly misinformed mainstream media. We have to change that perception, not reinforce it. Yet a deal this kind would reinforce their misleading narrative, further undermining public support for the social contract we need to defend.
Bad Reason #4: The Affordable Care Act will protect most of the 65 and 66 year olds affected by the change.
“Strengthening the political coalition for universal coverage seems like a helpful side benefit” to a Medicare age deal, says Chait. What universal coverage?
Remember when a lot of liberals, including Paul Krugman and Ezra Klein, were saying that Hillary Clinton’s 2008 health plan (now the Affordable Care Act) will provide something like universal coverage? I said it would leave at least 15 million people uninsured. I was wrong: The CBO concluded that 25 million people will be left uninsured under the Affordable Care Act. (That figure was later raised to 28 million after the Supreme Court overthrew the bill’s Medicare provisions.)
A lot of people will be unable to afford private health insurance under the Act, even with subsidies. (I was also shouted down back then for saying that the subsidies would be unreachable for a lot of middle class families.)
People who are making the argument for the Medicare age as a “compromise” seem to have also forgotten that the Act allows insurers to charge as much as three times in premiums for covering older (and therefore costlier) enrollees. This “significant chunk” of middle class voters wouldn’t find itself fighting for an Act that requires them to buy that insurance.
They’d be hit with a tax penalty instead – and still be uninsured.
And yet Matt Yglesias writes that it would be “foolish to categorically rule … out” increasing the Medicare age.
“There’s no need for the ritual scourging,” Yglesias adds, linking to a piece by David Dayen which takes Chait to the woodshed. “Ritual scourging,” like “ideological inflexibility” and “reflexive hostility,” is a phrase which means “a strong argument against a position I support.”
Yglesias’ position is unclear. At first he defends Chait’s position, at least in principle. Then he says that “people will disagree” about whether or not the Affordable Care Act is an acceptable substitute for Medicare, “but we can all see why theObama administration would be inclined to think that it is the case.”
Yes, people will disagree. But does Yglesias disagree? It’s unclear. And yes, we can see why the Obama Administration might be biased toward the idea. But is it a good or bad one?
By contrast, an earlier Yglesias piece about the Medicare age lays out much (though not all) of what’s wrong with the idea of raising it, and makes his position perfectly clear: It’s a bad idea.
Getting It Right
In that earlier piece, Yglesias makes one of the clearest, most concise arguments I’ve seen yet for the approach I and others favor.
“Rather than shrinking Medicare,” he writes, “we ought to be taking advantage of the program’s lower costs. One way to do that would be to lower the retirement age–potentially all the way down to zero–and bring more people into the program. That would reduce system-wide costs but require higher taxes or bigger deficits.”
That’s exactly right, and any self-described “deficit hawk” who doesn’t embrace should be called out for hypocrisy – even if that amounts to a “ritual scourging.”
What’s more, I would argue that deficits could go down under this scenario. The economy would expand more quickly, which is likely to put deficits in better balance as a percentage of the GDP. We would also eliminate the tax breaks for employer-sponsored health insurance, which would provide another offset.
Yglesias also proposes reviving 2008’s “public option,” reminding us that the CBO said it would save $ 68 billion in subsidies while lowering out-of-pocket costs. That’s another idea we’ve embraced as well.
Medicare works. It delivers good coverage, and it does so more cost-effectively. It should be strengthened, not weakened. It shouldn’t be “compromised” or sacrificed on the altar of lower expenditures, especially for an alternative that will actually cost more.
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