Raise the Age
By David Henderson
Whenever I’ve talked to college audiences over the last 10 years, I’ve told them that the biggest domestic political issue for the whole rest of their adult lives is likely to be spending on Medicare, Medicaid, and Social Security. I would like to abolish all three of those, but another option is to abolish them all in slow motion. And, failing that, to raise the age limit for Medicare.
Many people agree that the age limit should be raised, given that life expectancies are higher than when Medicare was implemented in the mid-1960s and given that people in their late 60s are, on average, healthier than their counterparts of 40 years ago. But many of these same people despair that it could ever be done. Yet we have a case where just something like that was done: the Social Security reforms of 1983.
At the time, I was an economist with Reagan’s Council of Economic Advisers and I despaired when the Social Security Commission, headed by Alan Greenspan, came out with its report. The Commission advocated no increase in the age but, instead, advocated speeding up tax increases that had been legislated for the future in a 1977 law and expanding the reach of Social Security to non-profits and newly hired federal employees. But when the compromise package reached Capitol Hill, one Democratic Congressman, Jake Pickle from Texas, bravely added an amendment and got it through. That amendment raised the Social Security age, in steps and in prospect, from 65 to 67. No one could argue that he wouldn’t have time to plan because the increase was gradual enough to let people plan.
The same thing could be done with Medicare: raise the age to 67 in steps by, say, 2018 (three months per year for every year between now and then), and then index both the Social Security age and the Medicare age to life expectancy. This is a good bit faster than for Jake Pickle’s reform, but the problem is also more serious. I don’t like making these proposals because, as I wrote above, I think the whole system should be abolished. But it is a significant step toward solving a financial tsunami before it hits. Where’s today’s Jake Pickle?