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Proposal would hike Medicare age to 67; 2 senators would raise the monthly premiums

Two Senate rebels jumped into Congress' cut-the-deficit competition Tuesday, proposing to raise the age of Medicare eligibility to 67 and increase monthly premiums for millions of current beneficiaries.

"We can't save Medicare as we know it," said Sen. Joseph I. Lieberman, I-Conn., who authored the plan with Republican Sen. Tom Coburn of Oklahoma. "We can only save Medicare if we change it," he added in an apparent jab at President Obama and congressional Democrats.

Reaction to the Lieberman-Coburn plan was lukewarm. Senate Minority Leader Mitch McConnell, R-Ky., praised the senators for coming up with a plan but didn't endorse it. Senate Majority Leader Harry Reid, D-Nev., called it a "bad idea." House Minority Leader Nancy Pelosi, D-Calif., said it was "unacceptable, especially for struggling middle-class Americans."

The response underscored the difficulty of legislative freelancing at a time the Obama administration and congressional leaders are struggling to negotiate a compromise that cuts future deficits and clears the way for raising the nation's $14.3 trillion debt limit.

The plan the two senators outlined includes a gradual increase over the next five years in the monthly premium that seniors pay for doctor and other nonhospital services. Aides said it would translate into a monthly increase of $15 to $20 initially.

The proposal would increase the Medicare eligibility age, now 65. It would go up two months each year, beginning with people born in 1949, until it reaches 67 in 2025. The age would then remain 67. If the 2010 federal health care law is repealed or overturned, as Republicans want and courts are considering, the age would remain 65.

For the first time, better-off seniors would be charged more money for Medicare Part A, which covers hospital care.

The same group already pays more for doctor visits as well as prescription drug coverage and, under the plan, would face even higher monthly premiums.

A major source of savings would come from making sure seniors pay out of pocket for at least a portion of their care.

To accomplish that, Lieberman and Coburn proposed barring insurance companies from selling Medigap policies that offer first-dollar coverage.

The Lieberman-Coburn plan also includes a single combined annual deductible of $550 for both Part A (hospital) and Part B (generally physician) Medicare plans.

Their plan would preserve Medicare as a government program, unlike a House GOP proposal that would require millions of future beneficiaries to purchase coverage from private insurance companies.

Additionally, the plan includes a $7,500 limit on out-of-pocket costs for doctor or hospital coverage, a provision designed to protect seniors who face potentially catastrophic costs.

According to the most recent report by the Medicare trustees, the giant program's insurance fund is projected to run out of money in 2024, five years earlier than last year's estimate.

Without a debt limit increase by Aug. 2, Treasury Secretary Timothy Geithner has warned, the government could default, risking calamity for the U.S. economy and serious effects worldwide.

Republicans walked out of bipartisan talks last week but nevertheless said negotiations had been fruitful. In the days since, Obama has stepped up his personal involvement in the effort.

After meeting separately with the Senate's Republican and Democratic leaders on Monday, he invited the Democratic leadership to a White House meeting today..

In the earlier talks, led by Vice President Biden, key lawmakers had outlined a series of proposals to cut several hundred billion dollars over the next decade.

Democrats concede that Medicare savings are needed, and the 2010 federal health care law included changes expected to save about $500 billion over 10 years. Lieberman's statement that Medicare can't be saved in its current form seemed a direct rebuttal to Obama, who said earlier this year that a House Republican proposal would "end Medicare as we know it" -- something he vowed would not happen while he was in the White House.

McClatchy Newspapers contributed to this report.