In advance of next year’s presidential election, we’re hearing a lot of campaign rhetoric about making changes to Medicare. Some candidates are even promoting something called “Medicare for all.”
But that idea doesn’t make any sense.
For one, Medicare is a program that we must pay into throughout our working lives in order to qualify for comprehensive health insurance starting only at age 65. And it still requires modest, quarterly “premiums” and “co-pays” for outpatient medical care.
Medicare isn’t designed to be “free” or “for all.” It’s designed to be an affordable safety net for older Americans. And it only can begin to work because working people pay into it over their lifetimes…and you begin getting benefits only once you’ve reached the age of 65.
So, how can it be “for all”? Or for anyone under the age of 65? And, for younger people without Medicare, isn’t that purportedly why they already foisted the Affordable Care Act on all of us back in 2010?
On the flip side, we also hear scare tactics about Medicare (and Social Security, for that matter) being “unfunded” in coming years. And granted, if some simple, reasonable fixes aren’t done, Medicare will be marginally under-funded in the near future. But it certainly won’t be “unfunded,” as some candidates have suggested. (Do they think they’ll get more votes by scaring Americans into thinking these programs are on the brink of collapse?)
So, let’s cut through the noise and talk about what’s really happening…
Medicare and Medicaid can and must adapt
The Centers for Medicare and Medicaid Services (CMMS) makes important decisions about how more than 130 million people get healthcare. And its programs comprise about 30 percent of the federal budget.
But the programs were designed more than 50 years ago. And, since then, there have been some dramatic increases in:
- The proportion and number of older Americans
- The average lifespan of Americans
- The cost of medical care and drugs
So, yes, U.S. Congress does need to make some changes if the program is to remain sustainable.
And as I see it, there are six types of changes being discussed…
1.) Increase the benefits age
Currently, you’re required to go on Medicare at age 65. So, one solution to the funding problem would be to raise the eligibility age for receiving benefits. They could even work to slowly phase-in an older eligibility age. For example, our current cohort of older Americans could continue receiving benefits at age 65. Then, the next generation could start at a slightly older age—and so on. They did the same step years ago to help sustain social security.
2.) Limit Medicare Benefits
There’s also some talk about limiting what Medicare will cover. Though, at least one CMMS official said not to worry because you can still choose to get private, “supplemental” plans tailored to your individual needs.
I think this is a horrible idea. It would fundamentally change what’s best about Medicare!
As you’ll remember, I talked a lot about these supplemental plans back in October, when I turned 65. I advised against paying for supplemental insurance since Medicare alone is so good, and the private “supplemental” plans are so costly for so little.
But if Medicare starts limiting what it covers, we may all need some kinds of supplemental coverage. Which is exactly what the supplemental health insurance industry wants!
3.) Expedite appeals process
On the upside, CMMS is also talking about expediting and streamlining the appeals process when you disagree with a Medicare decision about coverage. They’re even discussing a 24-hour expedited appeals process, which would be extremely helpful when you face a life-or-death situation.
4.) Limit fraud
The CMMS must also do a much better job preventing, investigating, and prosecuting the rife waste, fraud, and abuse in the system. Including putting a stop to criminally fraudulent billing for care that was never provided.
These abuses—and taking time and trouble to investigate them—take funds away from care for older people who actually need it. It also robs the taxpayers of their hard-earned funds.
5.) Start negotiating drug prices
As you may know, Medicare Plan D made the federal government the biggest buyer of drugs in the world. But it also forbade the federal government from negotiating drug prices! But now, finally, some folks within CMMS admit that the only way to keep drug prices down is through allowing competition and negotiation with big pharma.
6.) Cover some home-based care
Preparing for long-term care is a huge concern for older Americans. Most people would rather spend the remainder of their lives in the comfort of their own home.
So, CMMS is working to allow more Americans to live out their lives at home, with home- and community-based services. (These services aren’t currently covered by Medicare. But under certain circumstances, they’re covered by Medicaid.)
The only real option is to get some type of private Long-Term Care (LTC) insurance. I’ve looked into a lot of different plans over the past 25 years. But the numbers and probabilities didn’t really add up with traditional LTC insurance plans—especially when planning for two people. (For example, in less than a quarter of cases do both spouses end up needing to use LTC insurance at the same time.)
However, my financial advisor recently alerted me to a new kind of life insurance policy wrapped with an LTC rider. The pay-out for this hybrid life insurance/LTC rider comes out of the policy’s death benefit. So, if you never need to use the LTC rider, your life insurance beneficiaries will receive your full death benefit. However, if you use the rider, your beneficiaries will typically receive most of the unused death benefit. In the meantime, you are building cash value in your life insurance component each year you continue paying the premiums and don’t need to use the insurance.
It is costly, since it only recently became available for those already at older ages. But it makes a lot of sense to protect you and your spouse as well as your retirement assets and income for your heirs.
In the end, any long-term fixes for Medicare will require cooperation of both houses of Congress and the White House, which frankly won’t happen until after the election (if then).
So, for now, hold tight. And ignore all the irresponsible political rhetoric. Medicare will be just fine in the meantime.
P.S. I recently explained my top reasons for why I like Medicare—and why you should steer clear of Medicare Part D—back in the April 2019 issue of my monthly newsletter, Insiders’ Cures (“What you REALLY need to know about Medicare: My tried-and-true tips to getting the coverages you need—without wasting any of your precious time OR money”). Subscribers have access to this issue and all of my past content in the archives. So if you haven’t already signed up, now’s the perfect time to get started. Click here now!
“The Future of Medicare: A Discussion With CMS Chief Seema Verma.” AARP, 3/1/2019 (aarp.org/health/medicare-insurance/info-2019/cms-seema-verma-interview.html)