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Change Medicare to save Medicare

When Washington finally deals with our long-term fiscal challenges —
either by choice or crisis — there will be no better place to begin
than with the primary drivers of our debt and deficits: unsustainable
entitlement spending, particularly in the area of healthcare.

Unless Congress intervenes, Medicare could be insolvent as soon 2017. That means Medicare would have no way to pay its bills, endangering benefits for 43 million seniors and 9 million disabled Americans. There is no way grow or tax our way out of this hole. The only way to save Medicare is to change Medicare.

{mosads}In the last Congress, we released a bipartisan proposal designed to reduce Medicare outlays by $500 billion to $600 billion over the coming decade by adopting a range of common-sense proposals like charging wealthier seniors more, streamlining Medicare’s cost-sharing and capping out-of-pocket costs so seniors would not be bankrupted by hospital bills.

One of the most important reforms we endorsed is to adjust the eligibility age for Medicare to reflect gains in life expectancy. This reform alone is estimated to save taxpayers $125 billion over the next decade.

As most Americans know, the eligibility age for Medicare benefits is currently 65. However, since the creation of the Medicare program in 1965, life expectancy has increased dramatically, from roughly 70 in 1965 to 78 today. Advances in medicine could push life expectancy much further in the near future. The fact that Americans are living longer means the typical Medicare beneficiary spends two to three times as many years on Medicare today as they did in 1965. As a result, program benefits can’t be maintained.

Congress has already placed the retirement age for Social Security at 67. We suggest Congress should do the same by raising the age of eligibility for Medicare by two months every year. This means a 64-year-old would only have to wait an additional two months until they can participate in Medicare. A 63-year-old would wait an additional four months, a 62-year-old would wait an additional six months, and so on. This incremental approach is hardly a radical proposal. What is radical, and irresponsible, is pretending this problem will fix itself.

Moreover, seniors’ need for Medicare coverage at age 65 today is not what it was in 1965. Because people are living longer, healthier lives, there are about 7.7 million workers over age 65 in the workforce — that’s more seniors in the workforce than ever before. In fact, government data shows that approximately a third of seniors ages 65-69 are still in full-time jobs.

Opponents of this common-sense policy have suggested many older Americans have continued to work just so they could keep their health coverage. But the Congressional Budget Office has noted that jobs today “are generally less physically demanding,” suggesting that many seniors “might be capable of working beyond age 65,” and that “many who would do so might have access to employment-based insurance.”

Others have opposed increasing the age of eligibility for Medicare because they say this will increase premiums on individuals under age 65. However, for adults above age 65 who would not have employment-based coverage, federal changes to health insurance next year will make coverage cheaper for seniors, relative to younger adults.

The only foreseeable alternative to common-sense, bipartisan structural reforms like this would be deeper, across-the-board cuts to providers’ reimbursements. But continued deep cuts would harm seniors’ access to care. In fact, last year the Medicare Trustees warned that if current projected cuts materialize, 15 percent of hospitals could close by 2019, causing providers to “withdraw from providing services to Medicare beneficiaries.”

We expect the Medicare Trustees will issue their annual report soon, but we already know the Medicare program has unfunded liabilities of nearly $37 trillion dollars over the next 75 years. As 10,000 baby boomers age into Medicare each day, the program’s spending will roughly double over the next decade. The need to change Medicare is mathematical, not ideological. While politicians are entitled to their own opinions about how to save Medicare, they aren’t entitled to their own facts or demographics.  

The status quo, not reform, is the greatest threat to seniors who depend on the program. We believe the American people will support these changes if policymakers demonstrate real leadership. A recent poll from the Kaiser Family Foundation found that adjusting Medicare’s eligibility age is supported by two-thirds of seniors and a majority of independents. Kaiser also found people are more likely to support the policy if they understand it will help save Medicare. Adjusting the age of eligibility is a common-sense policy President Obama should endorse and Congress should have the courage to adopt.

Coburn is the ranking member on the Senate Homeland Security and Government Affairs Committee. Lieberman, an independent, retired earlier this year and is a former chairman of the committee.


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