Being neither American nor old, I have to wonder what the connection is between Medicare and unemployment.
First thing I’m unclear on is what would be the marginal cost of moving the Medicare age from 65 to 64, then to 63? (ignoring for a moment the exception for certain medical conditions)
This concept popped into my head a few years ago when I was talking with a woman at work who kept bitching about how old she was and how badly she wanted to retire. Her and her husband had saved heavily throughout their life intending to retire at 55 and enjoy the golden years.
Problem was that they both had health issues and needed their company health policy until they could qualify for Medicare. In the mean time, her company had been waiting for her to retire so they could replace her with one of the younger employees that they had hired on as part-time. Meanwhile, he can’t get full-time or benefits until she leaves, and she’s not leaving until she can get Medicare. This story isn’t meant to count as data, merely a reference point for what I’m talking about.
The issue I see is that even the most responsible person 40 years ago would never have been able to plan for a retirement that also included the modern day cost of health care in the US. So instead of leaving the work force at 55 the way they budgeted for, they are stuck occupying a job they neither want nor need, in order to keep their health coverage.
So for debate: I propose we examine the margins involved (as opposed to the moral/legal implications).
*What would be the cost increase for Medicare going from 65 -> 64.
*Can we get a sense of how many people aged 63/64 are currently in the work force.
Next, if we make the assumption that this plan would get everyone 63/64 to retire, what would that to on the other end of the spectrum as new grads are looking for job openings.
*What costs do we incur when recent grads aren’t able to find jobs?
*If this worked, what is the marginal cost of unemployment going from 9% to 8%?
This isn’t to suggest that new grads are taking senior level positions. The assumption here is that in steady-state when a senior level engineer retires, everyone moves up the ladder and one of the summer interns gets hired full time.
[I recognize that isn’t a universal truth, and that’s it is entirely possible the position will be left unfilled, but even if that’s the case, it means one less position to be laid off.]
As a thought experiment, stripping away a lot of the unnecessary externalities, how would a back of a napkin analysis play out?