In contrast to Social Security Reform, we do not find a large effect of potential increases in the age of eligibility on the long-term ability to finance medical spending. This is partly because the oldest old spend much more on medical care than the youngest old, so that cutting off the youngest old from receiving benefits saves much less than the share of the young elderly in the elderly population, and partly because if the eligibility age is raised, many more people will likely qualify for Medicare under disability rules. Since medical spending is so skewed to high spenders, having even a fraction of high spenders remain on the public rolls would eliminate much of the savings from increasing the eligibility age. We suggest instead that policy will need to focus on the management of medical care costs overall more than on the distribution of costs among different participants.
From David Culter and Louise Sheiner in Alan Auerbach & Ronald Lee’s Demographic Change and Fiscal Policy
