Does it makes sense to raise the retirement age for Medicare?
Raising the Medicare retirement age has long been considered a policy option for entitlement reform. A 2012 NBC/Wall Street Journal poll found that more than half of Americans (56%) were okay with raising the Social Security retirement age to 69. Even some moderate Democrats, namely Sen. Joe Lieberman, have supported raising the Medicare retirement age. According to the article, even if the Medicare eligibility age was raised to 67, it would represent a savings of $148 billion over the next 8 years. In a 2012 op-ed in the Washington Post, Lieberman argued, "That's a small sacrifice to ask for the benefits you will receive from a healthy Medicare program for the rest of your life."
Even more recent polls about Medicare have indicated support for raising the Medicare age considering longer lifespans. If President Trump's budget director has his way, there could be some mandatory spending cuts to Medicare and social security. However reasonable this may sound to some, the principal critique from liberal lawmakers is how such a change would disproportionately impact people with lower incomes, who already have shorter life expectancies. Such a move would be considered unfair and regressive, making it difficult to pass with a Democratic Senate.
Give them "health insurance exchanges!"
Given the fact that the Affordable Care Act provides near-universal coverage to people whose income is less than 400 percent of the poverty level, lower-income Americans who are ineligible for Medicare would still have access to the various subsidized programs. The law's federally-subsidized state insurance exchanges provide coverage to those whose incomes are between 100 and 400 percent of the poverty level, plus the Medicare expansion offers benefits to those with income below 133 percent of the poverty level.
Considering that Medicaid has so many problems with access and quality, raising the Medicare retirement age and migrating low-income seniors to insurance exchanges could make good fiscal sense. It would also boost tax revenue, which would fuel economic growth.
A gradual transition?
Some argue that raising the Medicare retirement age too suddenly could have devastating effects on low-income seniors, but there are alternatives to a dramatic or sudden increase. For example, the Forbes' article suggested raising the retirement age by three months per year, every year, and gradually migrating eligible seniors onto the exchanges.
Raising the Medicare retirement age would also have one extremely important economic effect. It would increase the incentive for older Americans to continue working; thereby increasing economic activity and tax revenue. According to the Forbes article, this is an idea that almost makes "too much sense," and the subject couldn't be raised at a more opportune time. The unique confluence of the fiscal cliff negotiations and the full implementation of Obamacare make raising Medicare's retirement age more than a remote possibility. It presents a far better solution than kicking the can a little further down the road.