$5.7 Billion Is A Small Number

The Incidental Economist has done some fantastic blogging explaining why the super committee should reject a proposal to raise the Medicare age from 65 to 67. The policy shifts costs to employers, beneficiaries, young people, and state governments, but most importantly the savings it generates are minuscule — $5.7 billion. Doesn’t sound all that small? Well, as Austin Frakt explains, “the Trustees of Medicare have estimated that the total spending by Medicare in that year will be $643.4 billion. Thus, the savings we might obtain by delaying eligibility until 67 is a mere 0.9% of total program spending”:

The point is that we can probably get much better savings — and actually reduce the rate of growth in health care — if we really step up the system modernization provisions in the health law.