The always-insightful Yuval Levin takes to the pages of The New York Times to clearly and succinctly explain how best to means test Medicare and Social Security. First, two broad principles: a) give rich old folks fewer benefits rather than nick them for higher premiums, b) assess wealth based on lifetime, pre-retirement earnings to encourage work and savings. For the wealthiest Americans, Levin would start by raising the Medicare eligibility age. As for Social Security, he directs to a plan from AEI’s very own Andrew Biggs:
In Social Security, there are even more opportunities for means-testing. Andrew G. Biggs of the American Enterprise Institute has proposed having the top third of beneficiaries (by lifetime income) receive no annual cost-of-living adjustment in retirement. The middle third would get half of today’s adjustment, and the bottom third would receive the same annual increase they do now. Such a reform, Mr. Biggs found, would reduce Social Security spending by more than a tenth over a decade and fix the program’s long-term financing. (Greater annual adjustments could be made for those who reach extreme old age and are running out of resources.)
Same issue as with President Obama’s pre-K idea. The goal here should be to target the spending rather than create some universal benefit in order get political support (in part to facilitate taxing).