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Hey, Let's Fix Health Care

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Written by CEPR   
Tuesday, 22 May 2012 15:15

Former White House adviser Ezekiel Emanuel offered in a recent New York Times column his bipartisan solution to Medicare, Medicaid and Social Security reform: Graduated eligibility for Social Security and Medicare, or linking "the age of eligibility to lifetime wealth." The idea, according to Emmanuel, is that "[t]he richer you are, the older you would have to be to be eligible for Social Security and Medicare."

As Dean Baker notes over at Beat the Press, there are two problems with this approach. First, the budget deficit is a health care problem, not a Social Security problem. Lumping Social Security in with Medicare and Medicaid certainly makes it look like a problem, but if you replace "Social Security" with "muffins," suddenly we are experiencing explosive growth with muffin costs.

Second, Emanuel's proposal states:

People in the bottom half of the lifetime earnings distribution would become eligible for normal retirement benefits at age 65 for Medicare and 66 for Social Security, just as they are today. But people in the next quarter of the lifetime earnings distribution would become eligible for the respective programs at 67 and 68, and those in the top quarter would become eligible at 70 and 71. All eligibility ages would increase over time, as they are scheduled to now.

Dean points out that "Emanuel's proposed cuts in these programs would hit people with average lifetime earnings of $40,000 and above."* Dean and Hye Jin Rho wrote a paper about means testing last year, which you can find here.

* See Social Security data on Average and Median Amounts of Net Compensation.

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