The CBO released a brief earlier this week about the budgetary impacts of raising the eligibility age for Medicare and Social Security. As anyone would expect, raising the qualifying age for either program will reduce government outlays. Raising the Medicare eligibility age by two years will reduce government outlays on the program by 5 percent. Raising the full retirement age for Social Security by three years will reduce outlays on the program by 13 percent.
The way it reduces these outlays however is almost entirely through cost-shifting. Those who are kept off of Medicare for two more years will have to pay up for more expensive private insurance. So not only would increasing the Medicare eligibility age only shift costs, doing so would actually increase the overall cost of the health insurance being purchased. The story is the same for Social Security. Denying Social Security benefits will force people to work longer to cover those expenses themselves.
Reducing government outlays by shifting costs on to old people is completely unnecessary. As those on the left keep pointing out, Social Security is almost totally fine, and Medicare problems are a consequence of rising health care costs, something that shifting some people off the Medicare rolls will do nothing to solve.
Additionally, there is absolutely no reason why we should even be contemplating scaling back these programs. Old people are living longer sure, but we are also an increasingly richer and richer country. In the last 40 years, our national productivity has doubled. A country that is twice as rich as it was forty years ago should not be scaling back at all. If anything, retirement ages should be dropping. The only reason we would even be contemplating such scaling back is if our increased wealth and productivity was flowing to a very small number of people instead of being shared broadly. Of course, that is exactly what has happened.
Finally, increasing eligibility for old-age entitlement programs always has a disproportionate impact on poor people and on certain communities of color. Those in lower socioeconomic classes do not live as long. Increasing the eligibility age necessarily takes away a higher percentage of old-age benefits from those who do not live as long. Imagine working all your life in a brutal low-income position, but dying at 66 and getting no retirement. It is not a farfetched scenario either: the life expectancy of poor black males is only 65.3 years.