David Frum

12.06.12

Why We Shouldn't Raise the Medicare Retirement Age

Matt Yglesias is on it:

Moving a patient off the Medicare rolls and onto the private market doesn’t just shift costs from the government to the patient. It also entails a massive increase in costs.

The Kaiser Family Foundation has found that lifting the eligibility age from 65 to 67 wouldreduce federal spending by about $5.7 billion in its first year of full implementation. But that would be offset by $11.4 billion in spending by other parties. That includes $3.7 billion in higher costs for 65- and 66 year-olds, $4.5 billion from employers through company-sponsored insurance, $0.7 billion from state governments, and $2.5 billion in higher average prices for third parties once younger seniors are shifted out of the Medicare risk-pool and into the general population.

That’s an absurd means of saving the federal government money—akin to raising $12 billion in taxes and then setting half the money on fire. The only people who actually benefit from this shift are health care providers who get to charge higher prices to 65- and 66-year-olds.