Raising the Eligibilty Age for Medicare and SS?

I just caught wind of this discussion, and I'm afraid this could become a reality.

The CBO just released its "research" that supports raising the Medicare and SS eligibility age:
www.cbo.gov/ftpdocs/125xx/doc12531/01-10-2012-Medicare_SS_EligibilityAgesBrief.pdf

The report indicates that more people will have to work longer--did they realize it's especially hard for those in their 60s to find jobs? (see: www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Fiscal_Analysis/Long-term-unemployment-addendum-November-2011.pdf) 

The report claimed that about 5% of those using Medicare would be uninsured but that most would get insurance from the private sector (Really--who's underwriting folks in their 60s and offering affordable premiums? The ACA has charged states with creating health insurance exchanges, but those are being challenged and states like Georgia are sitting on their hands waiting for it to be repealed: http://www.ajc.com/news/georgia-politics-elections/waiting-game-may-cost-1291709.html ) or from their spouse's employers (sorry same-sex couples, entrepreneurs, and single/widowed folks).  Here is a quote from the report:

CBO assumed that people who became ineligible for Medicare under the new age limits could purchase health insurance through the exchanges, and, depending on their income, might qualify for federal subsidies. CBO also assumed that people with the lowest income would qualify for Medicaid benefits. Without those changes to the recently enacted health care laws, CBO anticipates many more people would become uninsured if the MEA was raised.

Compare that to Robert Reich's thoughts (found at http://robertreich.org/post/7941066493):

So what’s the answer? For starters, allow anyone at any age to join Medicare. Medicare’s administrative costs are in the range of 3 percent. That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

In addition, allow Medicare – and its poor cousin Medicaid – to use their huge bargaining leverage to negotiate lower rates with hospitals, doctors, and pharmaceutical companies. This would help move health care from a fee-for-the-most-costly-service system into one designed to get the highest-quality outcomes most cheaply.

Estimates of how much would be saved by extending Medicare to cover the entire population range from $58 billion to $400 billion a year. More Americans would get quality health care, and the long-term budget crisis would be sharply reduced.

I really hope the President and Congress take a harder look at their proposals. Perhaps we could save money by allowing them to get health insurance from their spouses or purchasing it in the private market?

Thanks for listening to my rant. I'd love to hear your thoughts.

MAGI and Medicaid: How one may change the other

"The Patient Protection and Affordable Care Act” creates a new eligibility category in Medicaid, which will expand access to health care for millions of low-income Americans. For the first time, Medicaid will extend eligibility to all individuals who have income up to 133 percent of the Federal Poverty Level (FPL).  As part of this, states were going to start using a new calculation for income based on the Internal Revenue Code of 1986.  This income test uses a calculation called Modified Adjusted Gross Income, or MAGI, which allows all Social Security benefits to be left out of the calculation.  So, starting on January 1, 2014, all SSDI recipients as well as SS retirement beneficiaries would be able to apply for Medicaid and would be eligible (from an income perspective) if their MAGI (which excludes SS payments) fell at or below 133% of FPL (or $14,484 for a single person in 2011).  So, let me do the math, if a person makes $2,300 in monthly income, and $1,200 of that is from SS retirement payments, and $1,100 is from pension payments, that person (with an annual income of $27,600) could qualify for Medicaid because only $13,200 is counted as income for Medicaid qualification purposes.  (Now, I'm sure there will still be asset limits that will affect Medicaid eligibility, and most people will not meet those asset limits.)

In response to this new change, US Congressman Diane Black (TN-R) proposed HR 2576 to address MAGI.  Her bill would change the IRS code from 1986 so that MAGI would include all Social Security Benefits.  If her bill is adopted (and it passed the house 262-157 on October 27th), then my person in the example above would not be eligible for Medicaid.  Rep. Black assumes that this use of MAGI was an unintended consequence of the ACA that should be fixed (see her post http://black.house.gov/press-release/black-medicaid-bill-passes-house-bipartisan-vote), but I am not so sure. I have listened to both the supporters and the critics, and I am not sure how I feel about it.  This change may result in the denial 500,000 possible Medicaid recipients.  Would these people be better off with Medicaid? Would we all be better off if they had Medicaid (see http://www.cbo.gov/ftpdocs/124xx/doc12484/hr2576.pdf)?  If those 500,000 end up not receiving Medicaid, does that mean they will not be able to afford any health insurance?  And if they have no health insurance (or have to pay a significant portion of their income to health care), will we all be hit harder with higher premiums and increases in healthcare as their medical bills will likely go unpaid?  I suppose if they all did get Medicaid we'd all be paying higher taxes or higher fees for government services.  The assumption seems to be that these individuals would not be eligible for Medicaid but would be eligible to purchase "affordable" health insurance from the health insurance exchanges. I am not so sure those insurance plans will be "affordable."  In regards to HR 2575, my US Rep, Hank Johnson, voted "nay" on October 27th. The Senate will consider HR 674 (HR 2576 was attached to HR 674, and that is another issue altogether) on Monday, November 7, 2011. I suppose we shall see, and I am still not sure where I stand on this issue.

More COLA? How the new increase affects other benefits.

On October 19, 2011, the Social Security Administration announced that there will be a 3.6% cost-of-living adjustment (COLA) for 2012.  This is big news since this is the first adjustment since 2009.  Starting in January, beneficiaries will see an increase in their retirement checks or social security insurance (SSI) checks.  SSI checks from 2009-2011 maxed out at $674/month; in 2012, those checks will be as big as $698/month.  This brings an SSI recipient's annual income up to $8,386.75 from $8,095.32.  The average SS retirement beneficiary will receive an additional $39/month due to this increase (that is an additional $467/year).

The max benefit amount the SSA sets for SSI is used to determine the income qualifications for other benefits.  For instance, in Georgia, a nursing home resident must have less than $2,022/month in income to qualify for Medicaid (or use a Qualified Income Trust to qualify).  That $2,022 amount is three times the SSI max benefit (so, 674 x 3 = 2022).  With the new change, the income cap will be $2,094/month (that is, 698 x 3 = 2094). So, starting in 2012, nursing home residents that receive less that $2,094/month in income may qualify for Medicaid (if they also meet asset requirements).  This is just one example of the benefits that will be effected by this change in COLA.  Veteran benefits, requirements for community programs and others will be effected, too. Social workers and public benefits specialists will have to quickly get up to speed on the new requirements once they go into effect.  We have become familiar with the old numbers since they were good for 3 years, and now we'll have to change our cheat sheets and databases!