On Thursday morning, AEI’s Andrew Biggs, the Urban Institute’s Eugene Steuerle, and Stanford University’s John Shoven convened to discuss the structural problems of Social Security and Medicare that decrease work incentives for older Americans. The panelists agreed that as people live longer and the expected duration of retirement benefits increases, the programs should be reformed to incentivize people to work longer. Steuerle proposed offering partial retirement options to encourage workers to continue working even after they reach the Social Security claiming age.
Biggs recommended eliminating the 12.4 percent payroll tax rate for workers older than 62, which would increase the tax incentive for older workers to stay in the work force in a simple, revenue-neutral approach. Shoven then described the “Medicare Secondary Payer” requirement — in which workers over the age of 65 are required to purchase employer-offered health insurance if it is available rather than claim their Medicare benefits — as an on-average 30 percent tax for workers over the age of 65. He proposed removing this tax by adopting Medicare as a primary payer to keep people in the workforce longer. Near the end of the discussion, Steuerle emphasized the importance of taking a holistic approach to entitlement reform, which includes but is not limited to improving work incentives at older ages.
Social Security and Medicare are the two largest government programs, accounting for 36 percent of federal expenditures in 2011. In the coming decades, both programs will experience substantial cost growth because of a decreased ratio of workers to retirees and — in the case of Medicare — growing health care costs. Without reform, these programs will continue on an unsustainable path.
Reform proposals often focus on altering the level of entitlement benefits and payroll tax rates. However, Social Security and Medicare programs currently discourage work at older ages and discriminate against two-income families. Our expert panel will discuss ways to restructure the programs to improve work incentives, fairness, and solvency.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Registration and Breakfast
Aspen Gorry, AEI
Andrew G. Biggs, AEI
John Shoven, Stanford University
C. Eugene Steuerle, Urban Institute
Sita Nataraj Slavov, AEI
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Andrew G. Biggs is a resident scholar at AEI. Before joining AEI, he was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts and led the agency’s participation in the Social Security trustees working group. In 2005, he worked on Social Security reform at the National Economic Council and in 2001 was on the staff of the President’s Commission to Strengthen Social Security. Biggs’s work at AEI focuses on Social Security reform, state and local government pensions, and comparisons of public and private sector compensation. His work has appeared in academic publications as well as outlets such as The Wall Street Journal, The New York Times, and The Washington Post, and he has testified before the US Congress on numerous occasions.
Aspen Gorry is a research fellow at AEI. Gorry is a macroeconomist who studies employment and tax policy. His research focuses on jobs, specifically on how labor market policies impact employment outcomes for young workers. He has written about the impact of minimum wages on youth unemployment, optimal taxation over a worker’s life cycle, and the importance of early career experience for workers’ labor market outcomes. Before joining AEI, he taught economics at the University of California, Santa Cruz.
John Shoven is the Wallace R. Hawley Director of the Stanford Institute for Economic Policy Research and the Charles R. Schwab Professor of Economics at Stanford University. He is also a senior fellow at the Hoover Institution and a research associate of the National Bureau of Economic Research. He specializes in public and corporate finance and has published on Social Security, health economics, corporate and personal taxation, mutual funds, pension plans, economic demography, and applied general equilibrium economics. Shoven has published more than 100 professional articles and 20 books. He is a fellow of the American Academy of Arts and Sciences, a recipient of the Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security, and an award-winning teacher at Stanford.
Sita Nataraj Slavov is a resident scholar at AEI. Slavov specializes in public finance issues dealing with retirement and the economics of aging. Her recent work has focused on whether retiree health insurance encourages early retirement, the impact of widowhood on out-of-pocket medical expenses among the elderly, and the optimal time to claim Social Security. Before joining AEI, Slavov taught economics at Occidental College. She has also served as a senior economist specializing in public finance issues on the White House’s Council of Economic Advisers.
C. Eugene Steuerle is the Richard B. Fisher Chair and Institute Fellow at the Urban Institute. He has served as deputy assistant secretary of the US Department of the Treasury’s Tax Analysis department, president of the National Tax Association, chair of the 1999 technical panel advising Social Security on its methods and assumptions, economic coordinator and original organizer of the 1984 US Department of the Treasury study that led to the Tax Reform Act of 1986, president of the National Economists Club Educational Foundation, resident fellow at AEI, federal executive fellow at the Brookings Institution, and a columnist for the Financial Times. Steuerle is the author, co-author, or co-editor of 15 books and close to 1,000 articles, briefs, and congressional testimonies. He serves on advisory panels or boards for the Congressional Budget Office, Government Accountability Office, Joint Committee on Taxation, Committee for a Responsible Federal Budget, Independent Sector, Aspen Institute Initiative on Financial Security, National Committee on Vital and Health Statistics, and Partnership for America’s Economic Success.