How to Slow or Pay for the Increasing Costs of Social Security and Medicare?

money There is something close to a consensus among economists and political leaders who are willing to discuss the subject that, as large numbers of Baby Boomers become 65 or older, the government will have to modify the Medicare and Social Security programs to make them affordable. Present trends they say are “unsustainable”.

All the possible solutions to this problem that have been discussed are unpalatable to many people, but some are more unpopular than others.  A new Harris Poll was designed to measure which policies are more or less unpopular, and what the public would prefer if one or more of these policies had to be implemented.

The results show that raising the eligibility age for Social Security and Medicare and encouraging more people to work over the age of 65 are the least unpopular policies.  Raising taxes to pay for the increased costs of these services is more unpopular. Reducing Medicare and Social Security benefits are the most unpopular options.

These are some of the results of The Harris Poll of 3,171 adults surveyed online between February 14 and 21, 2011 by Harris Interactive.

The main findings of the poll are:

  • When given five choices and asked what they think should happen over the next five years, the policies chosen by the most people are encouraging more people over 65 to work (40%) and increasing the age of eligibility for Social Security and Medicare (37%);
  • Far fewer believe that we should increase taxes (27%) to pay for these benefits, while hardly anyone thinks we should reduce either Medicare (11%) or Social Security benefits (11%); and,
  • When asked which two of the five policy options people would choose if they had to pick two, the numbers increase but the rank order of responses is the same. Encouraging more older people to work (55%) tops the list followed by increasing the age of eligibility (51%). Increasing taxes (37%) is in the middle of the list with only 10% preferring to reduce either Social Security or Medicare benefits.


Differences by age

There are sizable differences between the preferences of older and younger generations.  Older people, particularly those who are already 65 or older, but also including Baby Boomers, are much more supportive of both encouraging older people to work and increasing the ages of eligibility. Echo Boomers and Gen Xers (all under 46) are less supportive of these options.

Differences by party

There are some substantial differences between the attitudes of people who support different parties. While large numbers of Republicans, Democrats and Independents choose the two least unpopular options – working longer and raising the age of eligibility – there is (no surprise here) a big difference in their support for increasing taxes. When asked to pick two choices fully 50% of Democrats, but only 21% of Republicans and 38% of Independents choose to raise taxes.

So What?

Even if many informed people think that present cost trends are unsustainable it is far from clear what the government will do to address this issue or when.  Medicare and Social Security are notoriously tough issues to tackle — the proverbial third rail of politics.  But, as and when the issue is addressed, it seems likely that the two least unpopular options, and possibly some tax increases, will be on the table for discussion.

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