I think this is a decent way to get some cuts. The main problem I see with it is that you are going to have something akin to extremely high marginal tax rates at certain cutoff points, ie, if you earn 10 thousand dollars more in your last couple years of working you lose out on 3 years of Medicare eligibility. These types of cutoffs distort behavior strongly and are best avoided. If there is a way to deal with this problem then I support this plan.
Homer: [looking at watch] Two hours? Why'd they build this ghost town so far away?
Lisa: Because they discovered gold over there!
Homer: It's because they're stupid, that's why. That's why everybody does everything.