JONATHAN COHN JULY 12, 2011
The budget debate is changing by the hour and, as I type this, it appears Senate Minority Leader Mitch McConnell may have finally blinked in the standoff over how to raise the debt ceiling. But let me return for a moment to the most revealing, if not the most important, development from yesterday. It wasn't President Obama’s press conference. It was the report, by the The Huffington Post’s Sam Stein, that Obama had at some point offered a key concession: gradually raising the eligibility age for Medicare from 65 to 67.
Strictly in terms of policy, this is a questionable move. At best. A few months ago, the Kaiser Family Foundation published a report on how such a change would play out. According to that report, some 65- and 66-year-olds could still get insurance from employers, assuming they could still work. But the rest would have to get coverage from Medicaid or the new insurance exchanges. For some of those seniors, particularly those with low incomes, the result would be better cost protection than they enjoy now. But, depending on their source of insurance, many would lose the stability, security, and physician access that Medicare, virtually unique in our insurance market, provides.
Meanwhile, premiums for employer sponsored insurance and Part B coverage would rise, because the population in each pool would become older and, as a result, sicker. Although the Kaiser report didn’t say it, taking younger seniors out of Medicare in this way would also nudge the health care system further away from universal pooling of risk. And that's not to mention the fact that it's risky to even think about this at a time when the threat to repeal the Affordable Care Act, by law or court ruling, remains credible. Without that law in place, many seniors would end up without insurance coverage of any kind.
Over the long run, creating one, seamless insurance system for all ages makes a lot of sense, although in many respects I'd prefer to make everybody else’s coverage look more like Medicare than the other way around. But make no mistake: This proposal would represent a concession, as much for the politics as for the policy. Most of the Medicare cuts under discussion fall neatly into the category of “payment reforms,” similar to what's already in the Affordable Care Act. These reforms would reduce the flow of money going into the pockets of the health care business, in ways that should ideally improve the quality and efficiency of our medical care. Obama and the Democrats can say, honestly, that such cuts wouldn’t touch the program's basic benefits.
That wouldn’t be the case with a higher eligibility age. And you can bet seniors will notice. One reason reaching the age of 65 is such a relief to so many people is that it represents their chance, finally, to get out of the world of private health insurance and into Medicare. For the most part, it means the end of jumping between sources of coverage of wondering constantly which doctors will see them. (Despite what you may have heard, doctors are still more likely to take Medicare than private insurance.) Medicare has its problems but for most seniors it offers peace of mind that other sources of coverage simply don’t, at precisely the age when many of them are first experiencing serious health problems. Postponing the age at which seniors can get that security is not going to make them happy.
So what would Obama get in return? It’s hard to know for sure, given the scattered reports from the leaks. But the pattern certainly isn’t encouraging. As Ezra Klein notes in this morning’s “Wonkbook,” Obama has also offered to adjust the benefit formula for Social Security, so that it pays less in the future. In exchange for these and other concessions, Republicans have shown themselves willing to give up ... nothing. Obama keeps saying he wants a “balanced” approach and “shared sacrifice,” in which some changes like these may belong. But, except for a brief moment when House Speaker John Boehner made the mistake of trying to act like a statesman, the Republicans have made clear they want no part of such a deal. (And, yes, by risking the U.S. economy, as well as the world’s, they are acting like terrorists do. But negotiating with terrorists is never a good idea.)
A lot of my friends think the administration’s approach to these talks reflects a crass political calculation: That positioning the president as a mediator between the parties will boost his reelection prospects. I assume there's some truth to that: Today's New York Times story on Obama's centrist bona fides doesn't look like the kind that materialized out of thin air. But I also see other motives at work. In particular, I think Obama wants to be the president who makes big, transformative accomplishments—he wants to be the president who does what everybody says can’t be done. And right now a major deficit reduction deal is what everybody says can’t be done.
It’s an admirable quality, in most respects. But news like yesterday's makes me worry that Obama’s desire to produce a deal may be blinding him to what’s in it.