Understanding Medicare - Part Three
This continues from – Part Two
The Future of Healthcare for Seniors
Every time we’ve had a budgetary crunch over the last couple of decades, we’ve heard a repetition of the same old remedies that directly affect those of us who are over 65, causing our spokespersons to rise and shut down the proposals that are not favorable. Here are a few of the proposals that have kept coming back in the past and, one has to assume, that will be come up again in the future:
As the typical retirement age in the US shifts a little upwards, and as we are living longer, it would seem advantageous to gradually –over several years- shift the social security retirement age as well as the Medicare eligibility age to 67. To many of us 65 and over, this is not acceptable. Waiting until age 65 is bad enough, and we shouldn’t have to pay for the nation’s “failed economic policies”.
Next is the frequently voiced proposition to raise Medicare premiums for the highest-income beneficiaries. This is usually voiced in relation to Part B and D premiums, accounting for approximately 25% of Medicare’s expenditures on those programs. If you currently earning over $85,000 per annum, or couples over $170,000, you are already paying considerably higher than the standard premiums, and the most widely discussed proposition would have you pay another 15% on top of that. This disregards that you may just as well flip over to private insurance, leaving Medicare with less funds.
Medicaid is currently benefiting from mandatory rebates granted by pharmaceutical companies, so there is a loud voice demanding that Medicare Part D be treated in the same way. Naturally, this pitted our spokespersons against the pharmaceuticals. The pharmaceutical argument has been that if they gave in to this demand, the people who would have to pay for this would be other Americans, and that it would leave fewer funds for research.
Another proposition that has been voiced in the past would have Medicare increase its co-pay requirements for services such as home health care, skilled nursing and laboratory tests, all of which currently cost beneficiaries nothing (skilled nursing facilities are free for the first 20 days only). The contrary viewpoint is that many low-income beneficiaries would not be able to afford additional copays and may have to go without care altogether.
Why not increase the payroll tax rate? This pays for the bulk of Medicare Part A hospitalizations and stands currently at 1.45% for each of workers and employers. It is estimated that hiking that up by 0.5% each, i.e. to 3.9%, would mean an annual increase of only $250 for someone earning $50,000 a year, whereas the added income to Medicare would be considerable. The opposite point of view to that argument is that making Medicare take an even bigger chunk out of the economy is never the answer. The answer lies in cost cutting, not additional taxing.
If the above-described Independent Payment Advisory Board (IPAB) was to be strengthened, for example given more authority to reduce benefits, then Medicare could be assured better financial sustainability. This however is a non-starter, because the board can easily become a yet more powerful political tool. They already have the power to increase premiums, but cutting benefits is too much power for an independent panel like the IPAB.
There are other mechanisms that also habitually go onto the designing boards of government agencies, pharmaceutical and other lobbies and political parties. In the meantime the Medicare Trust has been given life now until the year 2029, by which time it will have been in existence for 64 years. Given how strong the senior lobby has always been, there is every reason to suspect that some future congress will see fit to again extend its life by another decade or two.
About Mike Takieddine, the author:
With 20 years’ experience in at-home senior care, and with a currently active career as a home care consultant and in content and copywriting, it gives me great pride and joy to be able to combine those two skills to produce material of interest to various readers including baby boomers with aging parents.