Fiscal Responsibility and Medicare

It’s hardly news that the GOP’s supposed concern for fiscal responsibility is a sham. Still, it cannot be pointed out too much, given how central this myth is to the Republican ‘brand.’ Maybe some cracks are starting to show up in that myth, what with all the well-deserved negative publicity Paul Ryan’s Medicare- and Medicaid-busting budget plan has been getting.

Paul Krugman should get a lot of the credit for that, since he has worked hard (along with fewer than a handful of other commentators — like Ezra Klein) to expose and correct the lie that Medicare will be “saved” by shifting its costs from the government onto the older Americans who use it. In his column yesterday, he does that again, in response to Joe Lieberman’s idiotic proposal that the age of eligibility should be raised to 67:

Every once in a while a politician comes up with an idea that’s so bad, so wrongheaded, that you’re almost grateful. For really bad ideas can help illustrate the extent to which policy discourse has gone off the rails.

And so it was with Senator Joseph Lieberman’s proposal, released last week, to raise the age for Medicare eligibility from 65 to 67.

Like Republicans who want to end Medicare as we know it and replace it with (grossly inadequate) insurance vouchers, Mr. Lieberman describes his proposal as a way to save Medicare. It wouldn’t actually do that. But more to the point, our goal shouldn’t be to “save Medicare,” whatever that means. It should be to ensure that Americans get the health care they need, at a cost the nation can afford.

And here’s what you need to know: Medicare actually saves money — a lot of money — compared with relying on private insurance companies. And this in turn means that pushing people out of Medicare, in addition to depriving many Americans of needed care, would almost surely end up increasing total health care costs.

And that is for the simple reason that the cost of purchasing private insurance, adjusted for inflation, has risen at a much steeper rate than the cost of Medicare:

… So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse. And if we deny Medicare to 65- and 66-year-olds, we’ll be forcing them to get private insurance — if they can — that will cost much more than it would have cost to provide the same coverage through Medicare.

Barbara O’Brien has more to say on this subject, plus additional blogger commentary.


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