Bend The Cost Curve:
Raise the Medicare Eligibility Age to 67
By Edward Zelinsky
As Congress debates national health care reform, there is a growing disparity between the rhetoric of cost reduction (which everyone nominally favors) and the reality of electoral politics (which inhibits elected officials from alienating constituents by actually reducing costs). Indeed, there appears to be an inverse correlation between the vociferousness of Congress’ claim to be bending the medical cost curve and Congress’ willingness to undertake the practical steps to control medical outlays.
I propose a politically feasible measure to help control future Medicare costs: Congress should mandate on a delayed basis the higher eligibility age of 67 for Medicare. Congress would thereby match the older retirement age being required for full Social Security benefits with an older age for Medicare eligibility. Congress would thus compel future Medicare cost savings by reunifying at 67 the age for Medicare eligibility with that higher age for full Social Security benefits.
In 1983, to reduce future Social Security outlays, Congress passed and President Reagan signed deferred increases in the Social Security normal retirement age. These increases started to take effect in 2000 and now are being phased-in over twenty-two years. These increases will culminate in 2022 when the Social Security normal retirement age, over this twenty-two year period, will rise in stages from 65 to 67.
In effect, Congress and President Reagan put future Social Security cost savings on autopilot. The increase in Social Security’s normal retirement age, agreed upon in 1983, is now taking place automatically with no political pushback.
By way of contrast, the Medicare eligibility age was not altered in 1983 and consequently remains at 65. As a result, Medicare becomes available before full Social Security benefits. For example, individuals like me, born in 1950, will be Medicare eligible when we turn 65 but, by virtue of the 1983 reforms, will be entitled to full Social Security benefits only if we retire a year later at age 66. This gap is now scheduled to widen. When the 1983 changes are fully implemented in 2022, individuals born after 1959 will have to be 67 to receive full Social Security benefits but will still receive Medicare coverage two years earlier at age 65.
To reduce Medicare outlays, Congress should now coordinate the future Medicare eligibility age with the 1983 changes to Social Security. Specifically, Congress should today legislate, effective 13 years from today, that the Social Security normal retirement age and the Medicare eligibility age will then be reunified at 67.
Such reunification is particularly compelling because 65 is a different age today than it was when Medicare was established over a generation ago. Just as increases in contemporary life expectancies warrant a Social Security normal retirement age of 67, age 67 also makes more sense for Medicare eligibility in light of increased longevity.
By itself, the deferred reunification of the Social Security normal retirement age and the Medicare eligibility age at 67 will not solve all of Medicare’s funding problems. It would, however, be a convincing step towards really bending the Medicare cost curve.
Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America.