The senator who almost single handedly killed health care reform and undercut one of the most popular progressive provisions — opening up Medicare to younger people — is out with an op-ed this morning laying out five “bipartisan” ideas for reforming the Medicare program.
As you’ll recall, Sen. Joe Lieberman (I-CT) supported lowering the Medicare eligibility age before he opposed the Medicare buy-in, but now he’s now proposing raising that age to stabilize the program:
First, I will propose raising the Medicare eligibility age every year starting in 2014 by two months until it reaches 67 in 2025. […]
Second, I will propose reforming the complex Medicare benefit structure, which is wasteful, misunderstood by nearly all Medicare enrollees and prone to over-utilization and fraud. […].
Third, it is time to reform the premium structure. When Medicare was designed, the premiums paid by beneficiaries supported 50 percent of the program. Today they pay only 25 percent of total costs. […] I will propose that we raise the premiums for all new enrollees in Part B (doctor’s services) and Part D (prescriptions) starting in 2014 to 35 percent of program costs.
Fourth, we need to reform the way Medigap policies work. Many studies have found that Medicare enrollees who have supplemental coverage use as much as 25 percent more services than those with only traditional Medicare coverage. […]
Fifth, we cannot keep Medicare working for seniors by only reducing benefits or making adjustments to the premium structure. We also need to raise more revenue. I will propose that higher-income Americans pay an additional 1 percent of every dollar they earn over $250,000 to help save the program.
Lieberman argues that he doesn’t support privatizing the Medicare program like Paul Ryan proposes, but it’s worth pointing out that raising the Medicaire eligibility age would effectively force Americans between 64 and 65 years of age to purchase coverage from private insurers in the state-based exchanges (after 2014). As a recent study from the Kaiser Family Foundation points out, this would “result in an estimated net increase of $5.6 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree health-care costs.” The influx of older people into the exchanges would increase premiums by 3 percent in the exchanges and Medicare Part B, the study concluded.
And the savings themselves are slim. According to the Congressional Budget Office, “this option would have little effect on the trajectory of Medicare’s long-term spending…because younger beneficiaries are healthier and thus less costly than the program’s average beneficiary.” Even if policy makers increase the age to 70 in 2043, “outlays for Medicare would rise to 7.7 percent of GDP by 2050.”
The other big problem with Lieberman’s plan — even among potentially good ideas like changing the benefit structure — is that it doesn’t try to improve the efficiency of Medicare by expanding the delivery reforms in the Affordable Care Act or reducing some of the other cost overruns in the program. That’s where some of the big savings could eventually come from and they provide a far more sustainable solution to stabilizing the program than asking beneficiaries to pay more.