Medicare's future can be good or bad, depending on the results of the elections
Contributor: Buddy Robinson
Medicare is not in the news much these days, but don't be fooled. It's still an intense, big-money issue hidden in the background. Its future, for good or bad, is at stake. There are strong opposing ideas of what to do with it. The Republican party's plan would greatly increase health care costs for seniors and disabled, while enriching insurance companies.
Medicare is the federal program that pays most of the medical expenses for people 65 years old and up, and people with disabilities. That fact makes if very popular with the public. When a person goes from age 64 to 65, their health care costs drop several hundred dollars per month.
The government also decides the minimum of what has to be covered by Medicare – essentially, all medically necessary doctor and hospital treatment. Further, there is no exclusion of pre-existing conditions, or a health screen to pass in order to get your Medicare.
Because Medicare covers many things by law, the amount of federal money going into it keeps going up as the price of medical care increases. It also goes up as a larger portion of the population gets older.
The Republican plan, first pushed in a big way by Paul Ryan when he was Speaker of the House, is to change Medicare into a voucher system. They call it “premium support,” since they know people don't like the word “voucher."
Here's how it would work: The government provides you with a set amount of money each month to go towards health coverage. You use that money to help pay for a policy that you buy from an insurance company.
There are three big problems with this idea: (1) The insurance company, not the government, now decides what it will cover and not cover.
(2) The government would limit increases to your voucher to the general inflation rate, which is less than medical inflation. As a result, the voucher will cover a smaller and smaller portion of the total over time.
And (3), the insurance policy you buy will cover about 12 per cent less service for the money than before, because higher prices will now be paid to medical providers. That's a result of losing the huge purchasing power that Medicare has.
The bottom line is that you'll end up paying about twice as much (premiums and out of pocket) than before: $12,000/year instead of $6,000, on average.
So you see, this plan would greatly increase your costs, while giving an undeserved windfall to the big insurance companies and the 1 per cent. It's a transfer of money up to the top, pure and simple.
It would be much better to leave Medicare alone.
A basic aspect of Medicare that needs to be corrected is that in its original form it only pays for about 80 per cent of expenses. That leaves far too much for a person to pay. Need a $100,000 heart operation? That means you owe $20,000. Medicare should be changed to pay a much higher amount than 80 per cent.
Because of this gap, insurance companies rush in to fill it and supplement your government coverage by selling you their own policies – which makes Medicare complicated and much more of a hassle than it need be. If you want to know how profitable it is for them, just think of all the ads you see.
In fact, insurance companies have already created a half-measure towards the voucher plan. It's called Medicare Advantage, and over a third of all people on Medicare have these policies.
With Medicare Advantage, the government gives the insurance company that you pick all of your Medicare money – about $900 a month on average. With that, plus the premium you pay, the insurance company pays the medical bills. They are required to cover at least as much as original Medicare, and accept anyone who applies.
These are by far the most profitable policies that the health insurance companies sell. All that huge profit, of course, is government Medicare money that is being overpaid and wasted. Duplicated administrative systems waste more money still. Yet, Medicare can't really afford to waste any tax payer dollars, especially with all the Boomer bills to pay!
It would be much better to improve Medicare, have it pay most all of your medical costs, and eliminate the need for any insurance company involvement at all.
But the first priority is to make sure that the Republican plan to turn Medicare into a voucher system is stopped in its tracks. That's what elections are for.
*Threats to the safety net