Thoma and Krugman Arguing Medicare Changes Without All the Facts

We Need Data Driven Conclusions

Last week Senator Joseph Lieberman (I, Ct) outlined a plan in the Washington Post that would increase the financial strength of the current Medicare program.  It is generally assumed that by the middle of the next decade Medicare funding under its current structure will be insufficient to pay the promised benefits. Since that position has been supported by independent research, we will take that as a starting point of the discussion.  The following points are now relevant.

1. Medicare will not go broke or bankrupt once the cost of statutory benefits exceeds the funds available to pay them.  The default position, which is what will happen if nothing is changed, is that the program will continue, because it will have annual funding from the dedicated payroll tax and from senior premium contributions, but it will have to cut some benefits.

2. The Lieberman proposal was fiscal in nature, the major components of it were to consolidate Parts A and B and increase the premium paid by Seniors and to increase the payroll tax on those making more than $250,000.  To oppose these changes without finding other funding is to support the default option, lower Medicare services.  The Lieberman proposal represents the premise that if something costs more, it has to be paid for.  One can oppose his proposal to increase financial support from the beneficiaries of Medicare and from high income taxpayers but it is not an unreasonable proposal.

3. The proposal by Sen. Lieberman to raise the eligibility age to 67 starting gradually in 2014 has generated a storm of protest from normally rational and measured Progressive commentators.

Mark Thoma has said Once again, Joe Lieberman attempts to move health care reform in the wrong direction:

Paul Krugman has said:  The point, however, is that privatizing health insurance for seniors, which is what Mr. Lieberman is in effect proposing . . . (same link as Toma)

Mr. Thoma seems to be just echoing Mr. Krugman.  And no Mr. Krugman, the Lieberman proposal does not privatize Medicare.  There is no role for private insurance. It mainly increases the funding and slightly changes its structure.

The point of contention here is what is really a minor part of the Lieberman proposal, the delay of eligibility.  First of all, if the Obama health care plan is still in effect in 2014, the delay of eligibility will not cause Seniors in the 65-66 age group to go without health insurance, as everyone would be covered under the ACA.  Second, Mr. Krugman cites two highly respect health care economics experts, Austin Frakt and Aaron Carroll in discussing the higher health care costs that would occur from raising the eligibility age.

As a result, Mr. Frakt and Mr. Carroll suggest, Medicare spending might actually go up, not down, under Mr. Lieberman’s proposal. ...

However, Mr. Frakt has issued a clarification and suggests some (we think he means Mr. Krugman) may have mis-interpreted what he and Mr. Carroll were saying.

It seems that some have interpreted our words as meaning that delaying Medicare eligibility would cost Medicare more overall, that is, increase the total Medicare budget. That’s not what we meant

Two points are probably relevant here.

1. Any discussion of the fiscal impact of delaying eligibility for Medicare should be deferred until good data is available to show what that fiscal and medical impact, if any would be. Mr. Lieberman assumes it would be positive, but we need to know if that is true and by how much.  If the impact is small, the whole question may be moot.  No position can really be taken until we understand the financial and health care aspects of the 65-66 year old class of Medicare recipients.
2. Much of the antagonism toward the Lieberman proposal is probably aimed more at the messenger than the message.  And while there is certainly justification for the attitude given Sen. Lieberman’s past, attacking the messenger is a more typical tactic of Conservatives.  The more rational analysts of the world are better than that.