Over the next 10 years, the Affordable Care Act (Obamacare) is scheduled to cut Medicare spending by $716 billion, primarily by reducing payments to doctors and hospitals. Further, those cuts in spending will continue indefinitely into the future. By 2060, one-fifth of Medicare will be gone. The Medicare actuaries and others have warned that these cuts will reduce access to care for seniors.

Fortunately, there is a better way ― proposed by Liqun Liu, Andrew J. Rettenmaier, Thomas R. Saving and Zijun Wang in a study for the National Center for Policy Analysis: The reform consists of two changes to current law: (1) raising the Medicare eligibility age to the same age as Social Security (and thereafter indexing it to increases in longevity), and (2) requiring higher-income seniors to pay a greater share of their medical costs (or so-called means testing). This reform ensures that low-income workers receive full benefits (defined as the average benefits retirees would receive if the ACA’s cost-cutting provisions are not realized) upon attaining the new eligibility age. Once seniors reach the new eligibility age:

Individuals in the lowest 30 percent of the lifetime income distribution would receive 100 percent of full benefits (net of premiums).

Medium income workers (at the 50th percentile of lifetime income) would receive 87 percent of full benefits—significantly higher than the benefits they would receive under the Affordable Care Act.

However, individuals in the higher lifetime income groups would be required to pay a greater share of their health care costs and as a result receive a reduction in net benefits under current law.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

[Cross-posted at Psychology Today and John Goodman’s Health Policy Blog]