Wonkbook: Should we raise the Medicare age?

December 11, 2012

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook's Number of the Day: 2030. That's the year by which the Chinese economy will overtake the American economy in size, according to a study cited by Ian Talley of The Wall Street Journal. The report, published by the U.S. National Intelligence Council, sees continued U.S. dominance in global diplomacy as well as the continued rapid economic climb of emerging markets like Brazil and Turkey.

Wonkblog's Graph of the Day: Medicare age change matters most for minorities.

Today in Wonkbook: should we raise the Medicare eligibility age?; the austerity crisis; implementing the Affordable Care Act; the economy, stupid; Earth in the balance?

Top story: Should we raise the Medicare eligibility age?

Five ways raising eligibility could change Medicare. "The Medicare eligibility age is one entitlement policy on the table in a fiscal cliff deal. If it went through, the policy change would move about 5 million seniors out of the entitlement program and into the market that serves the non-elderly, with private insurance and Medicaid for low-income populations as the main options. The idea of raising Mediare’s age has bounced around Washington for a few decades now, giving researchers a lot of time to figure out what this change would mean for the health care system. Here are five of their most important findings. " Sarah Kliff in The Washington Post.

FAQ: Consequences of raising the Medicare retirement age, from The Incidental Economist's Austin Frakt.

Trade-offs in raising Medicare eligibility age. "Americans are living longer, and Republicans want to raise the Medicare eligibility age as part of any deal to reduce the government's huge deficits. But what sounds like a prudent sacrifice for an aging society that must watch its budget could have some surprising consequences, including higher premiums for people on Medicare." Ricardo Alonzo-Zaldivar in The Associated Press.

Debate: "Should the eligibility age for Medicare be raised?" at The Wall Street Journal.

A better way to raise the eligibility age for retirement benefits. "If it’s age increases that the political system wants, there’s a better way to do it. Ezekiel Emanuel, who advised the Obama administration on health care and now works with the Center for American Progress, calls it 'graduated eligibility,' and it would link the age of eligibility with lifetime earnings: 'Here’s how it would work. People in the bottom half of the lifetime earnings distribution would become eligible for normal retirement benefits at age 65 for Medicare and 66 for Social Security, just as they are today. But people in the next quarter of the lifetime earnings distribution would become eligible for the respective programs at 67 and 68, and those in the top quarter would become eligible at 70 and 71. All eligibility ages would increase over time, as they are scheduled to now.'"Ezra Klein in The Washington Post.

@mattyglesias: I think the White House is mostly trying to get the GOP out on a specific limb re: Medicare cuts so they can saw it off.

Sen. Dick Durbin opposes the idea. "As rumors swirl that Democrats may consider raising the Medicare eligibility age to reach a deal before the looming 'fiscal cliff,' a top Senate Democrat expressed opposition to that option Sunday. Speaking on Meet the Press, Senate Majority Whip Dick Durbin (D-IL) said raising the age at which seniors can receive Medicare from 65 to 67 would leave retired seniors with a dangerous gap in their health coverage." Nicole Flatow in ThinkProgress.

@CitizenCohn: Surprised this is so controversial, but one more time: Nobody is saying Obama *wants* to raise the Medicare age ...

COHN: No, don't raise the age. "As both fiscal and health care policy, increasing the Medicare age from 65 to 67, even gradually, has very little to recommend it. The federal government would save money, yes, but only because state governments, employers and individual seniors would pay more. Overall, the nation would end up spending more on medical care, not less. That’s the very opposite of what public policy, including Obamacare, is trying to achieve." Jonathan Cohn in The New Republic.

@sahilkapur: For GOP, raising the Medicare eligibility age has the added benefit of depressing Dem turnout in 2014.

SUDERMAN: Three reasons we should raise the age. "The most important likely effect is political. Reforming Medicare is difficult in part because of resistance by beneficiaries, who hold a lot of political influence; indeed, the fact that some beneficiaries might have to pay more for their insurance (CBO estimates that nearly all would still end up insured) is the primary argument cited by opponents of raising the eligibility age object to the change. That people who benefit from a program like it and/or get financial rewards from it, however, is not much of an argument for refusing to accept reforms, especially with an obviously unsustainable entitlement like Medicare. Diminishing the size of the beneficiary class is likely to diminish resistance to further change, and while it's not enough, it might ultimately make reform easier. " Peter Suderman in Reason.

CARROLL: The stupidity of increasing the Medicare eligibility age. "Almost all of the arguments for raising the eligibility age coalesce around the idea that since life expectancy has gone up so much, we have to think about making people work a little longer…People are actually living on average less than 5 years longer today on Medicare than when the program was passed...But what’s somewhat stunning is how much of a disparity there is in these gains. The top half of earners gained more than 5 years of life at age 65. The bottom half of earners, though, gained less than a year." Aaron Caroll in "The Incidental Economist" blog.

@mattyglesias: Odd that the people who want higher taxes on the rich and the people who want to means-test Medicare are usually different people.

Internet interlude: A stop-motion history of GIFs.

Top op-eds

PONNURU: Can Jindal, Rubio, and Ryan save the Republicans? "Only a few weeks after an electoral drubbing, three leading Republicans have settled on very similar accounts of what went wrong for their party. Jindal, Senator Marco Rubio of Florida and Representative Paul Ryan of Wisconsin are all talking about middle-class economic concerns. All three men seem to have realized that failing to address these concerns was the party’s biggest mistake, and rectifying that mistake is now its biggest challenge." Ramesh Ponnuru in Bloomberg.

BROOKS: What the social sciences are saying. "High unemployment rates may not hurt Democratic incumbents as much. In the American Political Science Review, John R. Wright looked at 175 midterm gubernatorial elections and four presidential elections between 1994 and 2010. Other things being equal, high unemployment rates benefit the Democratic Party. The effect is highest when Republicans are the incumbents, but even when the incumbent is a Democrat, high unemployment rates still benefit Democratic candidates." David Brooks in The New York Times.

SUNSTEIN: The columnist and the implied author. "Real-world authors are actual human beings, with their own distinctive characteristics, on display as they move through the world. Implied authors are the imaginary people whom authors create as they put words on a page...At his best, Washington Post columnist George Will is sharp, witty and appealingly above the fray, but his implied author can be pretentious, and he sometimes wears his erudition on his sleeve. New York Times columnist Paul Krugman is a Nobel winner and a national treasure, and he knows what he is talking about, but at his worst, his implied author is arrogant and self-absorbed. Charles Krauthammer of the Post may be a great guy, but his implied author is struggling with a serious anger- management problem. Whether or not you agree with him, the New York Times’s David Brooks has a wonderful implied author -- humble, open, appealingly tentative." Cass R. Sunstein in Bloomberg.

KLEIN: An austerity crisis deal. "For the White House, the key to any deal is tax revenues -- delivered at least partly through higher rates -- and a long-term solution to the debt ceiling. Additionally, any big deal will have to include some stimulus, including an extension of unemployment insurance and either an extension of -- or more likely, a replacement for -- the payroll tax cut. For Republicans, the key is some give on tax rates, as well as a few high-profile entitlement cuts, namely an increase in the Medicare eligibility age and chained-CPI." Ezra Klein in The Washington Post.

Music recommendations interlude: The Eagles, "Desperado," 1973.

The austerity crisis

Big progress in negotiations? "Budget negotiations between the White House and Republican House Speaker John Boehner have progressed steadily in recent days, people close to the process said, breathing life into talks that appeared to have stalled...The people familiar with the matter say talks have taken a marked shift in recent days as staff and leaders have consulted, becoming more 'serious.'…Perhaps the most encouraging sign of progress to veterans of congressional negotiations is the fact that both sides of the talks maintained a strict public moratorium on commenting on the talks." Damian Paletta and Carol E. Lee in The Wall Street Journal.

Try it yourself: Make your own deficit-reduction plan.

Elements of a fiscal cliff deal are coming into focus. "Fresh tax revenue, generated in part by raising rates on the wealthy, as Obama wants, and in part by limiting their deductions, as Republicans prefer. The top rate could be held below 39.6 percent, or the definition of the wealthy could be shifted to include those making more than $375,000 or $500,000, rather than $250,000 as Obama has proposed." Lori Montgomery and Paul Kane in The Washington Post.

Infographic: Options for marginal tax rates, and how that would translate into revenue.

Signs that a deal is near. "Perhaps the best sign Monday that a “fiscal cliff” deal is impending is that Democrats have shifted to talking about other changes that are part a big grand bargain — both small-ball provisions and longer-term shifts that go beyond the Bush tax cuts and entitlement cuts that have so far dominated the public debate...In fact, some Democrats are feeling so bullish that they are already jumping ahead to what they anticipate will happen in part two of a fiscal cliff deal – not the Bush tax cuts that are set to expire but the broader reforms that they expect to happen later next year." Suzy Khimm in The Washington Post.

Republicans who want to make a deal not sure if their backers will forgive them if they do. "As their leaders inch toward agreeing to higher tax rates, dozens of House Republicans find themselves caught between the will of a larger American public that favors higher taxes on the rich and the wishes of constituents who re-elected them overwhelmingly to oppose the Obama agenda at every turn." Jonathan Weisman in The New York Times.

...But the Democrats who write tax law think the game is up. "Rep. Jim McDermott (D-Wash.), a senior member of the House Ways and Means Committee, said he thinks Republicans will relent on the issue of raising the top tax rates, and will clear Senate-passed legislation to extend tax cuts for middle-income Americans." Joseph J. Schatz in Politico.

The GOP's tipping point on tax increases. "Republicans are gradually moving toward accepting revenue increases as a part of a deal to avert the 'fiscal cliff.' So far, though, the cast of characters who have jumped onboard with the idea of raising taxes on the wealthy is missing something. Specifically: Members who have some real skin in the game politically. Just about all of the members who have come out in favor of agreeing to Obama’s tax deal so far have decidedly little to lose politically in the coming years." Aaron Blake in The Washington Post.

Federal agencies are bracing for cuts. "aced with across-the-board spending cuts of roughly 8 percent, top officials are drawing up plans to lay off workers, shift money to critical duties like airport screening, delay new contracts and postpone payments to states for some education financing. Some 1,200 programs, including airport security, food inspections and drug approvals, could be affected by the automatic cuts. They must be squeezed into the last nine months of the 2013 fiscal year, which ends Sept. 30." Ron Nixon in The New York Times.

Meet Rob Nabors, the Obama negotiator you don't know. "Three things you should know about Rob Nabors: 1. He loves lists, thinks in lists, breaks down plans of action into lists. 2. He prizes discretion and despises leaks, which is why Republicans say they can trust this Democrat. 3. He may be the most important player you’ve never heard of in the ongoing 'fiscal cliff' drama." Suzy Khimm in The Washington Post.

How the austerity crisis will affect the states. "As Congress and the White House negotiate over ways to avoid a 'fiscal cliff' at the start of the new year, governors and state lawmakers are watching anxiously because of the potential effect on state budgets…States could lose an estimated $7.5 billion in federal funding if the automatic spending cuts take effect for 161 grant programs. Some of the biggest cuts could come in aid to schools that teach large numbers of low-income students, special education, early childhood programs and food subsidies for women and children." The Associated Press.

Preparing for ‘fiscal cliff,’ investors move assets to avoid higher taxes. "Americans are moving to sell investment homes, off-load stocks, expand charitable donations and establish tax-sheltering gifts before the end of the year...For the most part, the people moving their assets are the wealthy, who have the most to lose even if a deal is struck. Ordinary Americans also are in line for higher income and payroll taxes and fewer deductions and tax credits if the nation goes over the fiscal cliff. But since most of their earnings come through wages, there is little they can do to minimize the impact." Michael A. Fletcher and Dina ElBoghdady inThe Washington Post.

Free lectures interlude: The structural engineering of defeating earthquakes.

Implementing the Affordable Care Act

Obama approves insurance exchanges in 6 states. "The Obama administration gave conditional approval on Monday to health insurance marketplaces being set up by six states led by Democratic governors eager to carry out President Obama’s health care overhaul. The six are Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington." Robert Pear in The New York Times.

...But the White House nixed a partial Medicaid expansion. "The administration’s reasoning goes like this: The federal government was giving states a really, really good deal on the Medicaid expansion. It was footing the entire bill for the newly eligible enrollees for three years. To put that in context, the feds usually chip in about half or two-thirds of a state’s Medicaid costs...Congress, White House officials say, gave states that really high funding in the service of a very specific goal: Ensuring all Americans have access to insurance options." Sarah Kliff in The Washington Post.

Tennessee rejects state-run exchange under Obama's health law. "Tennessee is the latest state to reject a state-based insurance exchange under President Obama's healthcare law. Gov. Bill Haslam, a Republican, announced the decision Monday. He is one of the last governors to make a decision ahead of Friday's deadline." Sam Baker in The Hill.

Sens. Klobuchar, Hagan: Delay medical device tax. "Sens. Amy Klobuchar (D-Minn.) and Kay Hagan (D-N.C.) on Monday sought to delay a new tax on medical devices, which is part of President Obama's signature healthcare law...The tax, set to take effect in 2013, was designed to raise about $20 billion over a decade. But the senators said the new tax threatens an industry that employs more than 400,000 people in the United States." Sam Baker in The Hill.

Conservative think tank releases 'post-ObamaCare' health plan. "A conservative think tank released a plan Monday to replace the Affordable Care Act (ACA) if opponents succeed in repealing the law. The 59-page document from the American Enterprise Institute (AEI) recommends a market-based approach to overhauling health entitlements and reforming insurance regulation if President Obama's healthcare reform law is killed." Elise Viebeck in The Hill.

Read: AEI's report, "When Obamacare Fails".

White House drops support for major Medicaid cut. "The Obama administration backed away Monday from roughly $100 billion in Medicaid savings it had proposed during deficit-reduction talks earlier this year…The Health and Human Services Department (HHS) said the Obama administration no longer supports a plan to combine the various calculations used to determine the federal government's share of Medicaid spending. Medicaid is operated jointly by the states and the federal government, and streamlining the calculation of federal payments would have shifted more costs to the states." Sam Baker in The Hill.

Read: The Department of Health and Human Services' decision on Medicaid.

Moneybags interlude: What $315b in gold looks like.

The economy, stupid

U.S. Treasury, AIG are poised to sever ties. "Treasury announced on Monday that it is completing its exit of American International Group, the insurance behemoth that nearly imploded four years ago...It plans to sell about 234 million shares, raising about $8 billion and leaving Treasury with a $5 billion profit on its investment. The Federal Reserve, which also invested in the firm, has already unloaded virtually all its holdings, for a profit of $18 billion." Zachary A. Goldfarb in The Washington Post.

Report: Chinese economy to surpass US in 2030. "China will be the world's largest economy as Asia surpasses North America and Europe by 2030, according to a new U.S. National Intelligence Council report published Monday...And while the U.S. will likely remain 'first among equals' amid the new global power architecture, the Department of National Intelligence believes China's economy will likely overshadow the U.S. a few years before 2030." Ian Talley in The Wall Street Journal.

Auditors still aren't doing a good job, study says. "The US’s top auditing firms are failing to adequately sign off on some companies’ accounting controls, the country’s industry watchdog has warned in a report. Auditing firms such as Deloitte & Touche, Ernst & Young and PwC are required to approve companies’ so-called 'internal control over financial reporting' (ICFR) when they look over company statements." Simon Johnson in Politico.

High voices interlude: The helium shortage is so out of hand, it's like a balloon filled with helium that you've let fly away.

Earth in the balance?

What you need to know about the 'ticking Arctic carbon bomb.' "Scientists are expressing fresh concerns about the carbon locked in the Arctic's vast expanse of frozen soil. New field studies, presented here this week at the fall meeting of the American Geophysical Union, quantify the amount of soil carbon at 1.9 trillion metric tons, suggesting that previous estimates underestimated the climate risk if this carbon is liberated. Meanwhile, a new analysis of laboratory experiments that simulate carbon release by thawed soil is bolstering worries that continued carbon emissions could unleash a massive Arctic carbon wallop." Eli Kintisch inScience.

Forecasters are optimistic about U.S. carbon emissions. Should they be? "Every year, the Energy Information Administration puts out its forecast of energy trends in the United States. And each year since 2009, the agency has become steadily more optimistic that the country will restrain its carbon-dioxide emissions in the decades ahead. In its latest forecast, the EIA expects U.S. carbon emissions from all energy sources to stay below 2005 levels through 2040 and beyond." Brad Plumer in The Washington Post.

Sweeping intel report sounds alarm on climate threats. "A new U.S. intelligence community report finds that climate change will fuel new conflicts and competition for resources in coming decades. The federal National Intelligence Council’s 'Global Trends 2030' report issued Monday follows Defense Department analyses that have similarly called climate change an emerging security risk." Ben German in The Hill.

How climate change impacts health care costs. "One core challenge is monitoring and quantifying the connection between changing weather patterns and adverse health effects, as ailments are diffuse and arise only at the end of a very complex causal chain. Inquiry into the number of asthma cases caused by Hurricane Sandy, for instance, promises no easy answer." Dylan Walsh in The New York Times.

History jokes interlude: Gadsden Purchase humor.

Et Cetera

What do ‘right-to-work’ laws do to a state’s economy?. Brad Plumer in The Washington Post.

Federal court hears arguments on Senate filibuster challenge. Ed O’Keefe and Ann E. Marimow in The Washington Post.

Tough internet regulation plan dropped. Richard Waters and Simeon Kerr in The Financial Times.

Study: The U.S. government has way too many overlapping programs. Dylan Matthews in The Washington Post.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.

SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Most Read Business
Next Story
Dylan Matthews · December 10, 2012