By Matt Stoller, a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.
In September, 2009, Rep. Alan Grayson got on the floor of the House of Representatives and said that the Republican health care plan – leaving 44 million uninsured – was killing people. It was a famous speech, in which he said that the Republican health care plan consists of two steps. One, don’t get sick. Two, if you do get sick, die quickly. This speech threw the political world into a temporary tizzy, because Grayson actually made the point that health care is about living and dying, not making charts look nicer. The speech, while rhetorically zesty, was data-driven. It relied on this study from Harvard Medical School researchers showing that the death rate for those who are uninsured is 40% higher than those who have insurance (controlling for socioeconomic factors).
So with that in mind, it’s worth asking the question – how many people will die if the Medicare age is increased to 67? To answer this question, we have to make assumptions about other parts of the health care system going forward. Will Obamacare be implemented fully? Will all states accept expanded Medicaid? Will income inequality to continue to increase and make it harder to pay for out of pocket expenses? Will there be tweaks to Medicare or Medicaid in the fiscal cliff or future fiscal cliff-like scenarios?
Even so, we can and should start to understand what the human death toll might be if we increase the retirement age to 67. If the age goes up, there will be 5 million 65 and 66 year olds who can’t get Medicare for at least a year (7 million for at least a month), and will have to rely on some other system for health care payments. Kaiser has a study out on what would happen to Medicare if the eligibility age goes to 67, but with the assumption that Obamacare kicks in and covers all 66 and 67 year olds with a mixture of employer/retiree insurance, Medicaid, or insurance through exchanges. We can assume, however, that some of these seniors will be uninsured. The Congressional Budget Office says that this number, by 2020, will be 5% (see page 6). The Center for Budget and Policy Priorities, and fairly centrist think tank which supports cutting Social Security, provides the rationale.
In reality, however, many of these 65- and 66-year-olds are likely to end up uninsured. Some of those eligible for premium credits in the exchanges would not enroll because they would regard the required premium contribution as too high; people with incomes between 300 and 400 percent of the poverty level (about $34,500 to $46,000 for an individual in 2014) will have to pay 9.5 percent of their income — $3,300 to $4,400 — for exchange coverage. Even some of those eligible for more generous premium credits or for Medicaid would likely fail to obtain coverage; participation in means-tested programs like Medicaid falls far short of that in social insurance programs like Medicare, in part because of the difficulties navigating the application process.
In addition, many 65- and 66-year-olds who would be ineligible for Medicaid or premium credits because their incomes exceeded $46,000 would find unsubsidized coverage in the exchange to be out of reach. According to Kaiser, half of 65- and 66-year-olds who would have to rely on the exchange would have incomes too high for premium credits. Because exchange plans could charge the oldest workers three times as much as the youngest, unsubsidized premiums could reach $10,000 to $12,000 (in 2014 terms) for 65- and 66-year-old individuals and twice that for couples.
How many of the 5 million affected elderly would go uninsured due to a lack of Medicare availability? And how many of those would die as a result of lacking insurance? Let’s make a very generous assumption, and say that Obamacare kicks in fully by 2014, and all governors accept Medicaid expansion. In fact, let’s assume Obamacare works so well that the entire country becomes like Massachusetts (where the system is already in place), with an uninsurance rate of 4%. This rate is lower than that assumed by the CBO, so it’s fairly cautious. In addition, this assumption entirely overlooks the institutional culture of Massachusetts where uninsurance rates were already lower than the norm prior to the implementation of Romneycare, the fact that every stakeholder in the state wanted to make it work, and that MA has a better health care system than most other states. But we’ll go with it.
At a 4% uninsurance rate, that’s 200,000 uninsured 65 and 66 year olds. The death rate for people in that age bracket is 1.576% annually, which means that 3152 of them would die as a matter of course. If the death rate is 40% higher for the uninsured in this bracket, which would be consistent with the Harvard Medical School study on working age populations, then this means that 1261 seniors will die because they don’t have access to Medicare. This number comes from back of the envelope but reasonably cautious assumptions. If Obamacare doesn’t work as advertised, or out of pocket costs for insured seniors go up (and they will), the number of dead goes up. In fact, if Obamacare doesn’t work, is repealed, or defunded, the uninsurance rate for 66 and 67 year olds would be about 15%, consistent with the rate for 50-64 year olds. That’s 6048 dead. In other words, raising the Medicare age to 67 while implementing Obamacare will kill an additional 1261 seniors, while raising the Medicare age to 67 without implementing Obamacare will kill an additional 1261 seniors. Or we could leave things as they are, with a Medicare age at 65, and no extra seniors need die.
Remember, this isn’t a story of heartbreak and sadness. It’s a story of murder by policy. Medicare isn’t a welfare system where people are getting charity from the state, it’s a social insurance system that these people have already paid for. Increasing the eligibility age for Medicare isn’t shared sacrifice is simply confiscating the property that people prepaid for and that they need to stay alive. Morally, it’s no different than choosing 1261 people aged 65 and 66, disproportionately picking more black and/or poor people, and killing them so that you don’t have to honor the promise they paid for that they would get health care at 65.
Next time you hear someone talk about the need to “reform entitlements” and raising the retirement age, just remember what these words actually mean.