NCPA - National Center for Policy Analysis

Why Expand Medicare And Deplete The Labor Force?

February 8, 1999

President Clinton wants to expand Medicare to "near-elderly" Americans, ages 55 to 64. Last year, he wanted to expand "buy- in" coverage to those age 62 to 65 -- or for those out of work in the 55 to 62 category.

Quite aside from the fact that Medicare is already in a world of financial trouble, expanding benefits would encourage people to retire earlier -- exacerbating the labor shortage.

  • The rise in the early retirement rate among workers in the 63 to 64 age bracket rose from 32 percent to 38.5 percent just between 1988 to 1996.
  • The early retirement age for workers ages 55 to 62 went from just 10.4 percent to 12.5 percent over the same period.
  • Although the number of uninsured near-elderly workers grew from 10.8 percent in 1987 to 14.3 percent in 1997, that rate has kept pace with the growth of the uninsured population as a whole.
  • The near-elderly are much more likely to be insured than the general population -- with 14.3 percent of them uninsured as of 1997, compared to 18.3 percent of all those under 65.

Most of the near-elderly are healthy and can purchase an insurance policy if they want to -- in most cases at less cost than they would be charged under Clinton's plan, say analysts.

The greater problem, they point out, is that expansion of benefits to younger age groups only discourages productive employment among those approaching the normal retirement age.

Source: Merrill Matthews Jr. (National Center for Policy Analysis), "Want to Shrink the Work Force? Expand Medicare," Investor's Business Daily, February 8, 1999.


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