A lot of CEOs have gotten on the deficit-reduction bandwagon, but they've often been loath to push for specific proposals, endorsing instead an overall "framework" for fiscal consolidation that's big and bipartisan.
That's now starting to change: A group of the country's leading CEOs from the Business Roundtable has put out an entitlement reform plan that proposes to raise the eligibility age for both Social Security and Medicare to 70.
Leading Republicans have long rallied to raise the eligibility age for Social Security to 70, but the Business Roundtable's recommendations for Medicare go significantly further than the GOP consensus: During the fiscal cliff negotiations, for instance, Boehner proposed raising the Medicare eligibility age from 65 to 67 years, while the CEOs want to push it three years higher.
The group wants a slew of other changes as well: higher premiums for wealthy beneficiaries, chained CPI and more private competition for Medicare and private retirement programs.
“Even though most of these modernization initiatives would be phased in gradually, the immediate benefits would be enormous. First, they would put Medicare and Social Security on the sound financial footing needed to provide a sustainable retirement safety net. This would represent a major step forward in reducing the growth of government spending,” Gary Loveman, CEO of Caesars Entertainment Corp. and Business Roundtable participant, wrote in the Wall Street Journal.
The Business Roundtable believes its proposals would save the government $300 billion in Medicare spending and extend Social Security's solvency for 75 years. But the changes would also come with costs to others as well. By eliminating Medicare coverage for those between 65 and 70 years old, the plan would send more individuals into Medicaid and the newly created health-insurance exchanges, as not everyone would continue to work or be covered by their employers' insurance, explains Tricia Neuman, a vice president at the Kaiser Family Foundation.
That would drive up health-care premiums overall in the exchanges, as there would be older, sicker people getting coverage, says Neuman. In states that don't elect to participate in the Medicaid expansion under Obamacare, lower-income people in their mid- to late-60s could also become uninsured, particularly those who are in physically demanding jobs they might not be able to continue until they're 70. Overall, raising the eligibility age "would reduce federal spending but would do so in a way that shifts costs to other payers and raises overall health care costs," says Neuman, who's examined the impact of raising the age to 67.
On the flip side, proponents of the changes argue that raising the retirement age makes sense given the rise in life expectancy, and that sacrifices are necessary to ensure the solvency of entitlement programs. "What has happened to Social Security over years is because people are living much more longer, it's moved more toward a middle-aged retirement system," says Eugene Steuerle, a senior fellow at the Urban Institute.
The Business Roundtable has also tried to add provisions to address concerns that a higher retirement age would disproportionately hurt the poor, who tend to live shorter and work more physically taxing jobs than wealthier Americans. The CEOs' proposal for Social Security, for instance, recommends that accommodations be made for "the unique needs of individuals in physically demanding occupations" and new minimum benefits to help lower-income workers.
But the most notable part of the CEOs' proposal is the recommended hike in the Medicare eligibility age to 70, which goes further than what Republicans have been asking for. Republicans have yet to specify the entitlement changes they actually want to happen, but on this eligibility issue, it looks they'll have a bunch of business executives in their corner.