Medicare for All – what it really means.

  • Medicare for All – what it really means.

    A bipartisan group of political pundits and current politicians have a new rally cry:  Medicare for all and this rally cry is gaining steam.

    The Hill is reporting that 70 percent of those polled are for it. However, once the fine print of federal regulations surrounding Medicare is read it just might not be what everyone thinks it will be.

    First off, Medicare is a great system for those who use it prudently and have full coverage.  For example, if you are enrolled into Medicare (you are 65 years old or older) and are admitted into a Medicare recognized health care facility for a medically necessary need, and have Medicare Part A, Part B, Part D and a Medigap Plan F policy (i.e. full coverage), all costs are covered for that medical need.

    The other advantage with Medicare is the ability to see almost any doctor in the country. There are no networks within Medicare. If the physician or health care facility accepts Medicare for reimbursement, there is coverage.

    In a past article from Forbes, “87 percent of family medicine physicians are taking new Medicare patients” while “99 percent of general surgeons and 98 percent of orthopedic surgeons take new Medicare patients.” Of course, this number may change but it is still a larger percentage of acceptance versus specific private insurance networks.

    As for costs, Medicare may also have another advantage. The cost for full coverage may be lower than what is available on the open market or even through employers.

    In 2018, on a national average, Medicare costs per person are:
    • Part A – no premium for those who qualify (40 quarters of employment).
    • Part B – $134.00 a month or $1,608 annually.
    • Part D (prescription drug coverage) – $52.52 average monthly premium or $630.24 a year (these plans are based on the amount of medications being used and can be either higher or lower in terms of premiums).
    • Supplemental Coverage (Medigap Plan F) – $208.12 average monthly premium or $2,497.44 a year (these plans may be based on age, gender and residency and may be either lower or higher depending on which plan is chosen).
    Total cost for full coverage on a national average – $394.64 a month or $4,735.68 annually

    Three big advantages for those on Medicare: possible full coverage for care, access to almost every health care provide, and price.

    This should be an easy sell, but for those who read the fine print of Medicare also know that there are some strings that come with it that allow the federal government to have more control than ever before.

    The first string, which will only impact those who earn an income or who save most of their retirement dollars in a 401(k) or IRA, is that Medicare is means tested.

    Medicare, through its Income Related Monthly Adjustment Amount (IRMAA), which was created by the Medicare Modernization Act of 2003, works with the IRS to determine how much income one earns.

    If the amount of income is too high, then Medicare will assess a surcharge on top of the current year’s Medicare Part B and Part D premium automatically. Retirement income, wages, as well as income from savings and investments, may wind up increasing your health costs.

    Currently the IRMAA surcharge brackets are:

    The federal government is also in charge of setting the thresholds for the IRMAA brackets and with the passing of the Bipartisan Budget Act of 2018 the “methodology used to index these thresholds will have an adjustment in 2020, and accordingly more beneficiaries will be subject to the income-related premiums.”

    That’s right; IRMAA brackets, by law, are expected to be lowered to ensure that more of those who enroll into Medicare will be subject to IRMAA surcharges.

    The second string for Medicare for all is the fact that the premiums for the bulk of coverage under Medicare are set by the federal government.

    With Medicare inflating at a historic rate of over 7.5 percent since inception as well as an aging population and a reduction of medical staff, the federal government can justify almost any increase in costs in any given year.

    The third and final string is that Medicare is known as a reimbursement program for those who provide health related services to beneficiaries of Medicare.

    According to Medicarefacts.org this reimbursement program “refers to the payments that hospitals and physicians receive in return for services rendered to Medicare beneficiaries. The reimbursement rates for these services are set by Medicare and are typically less than the amount billed or the amount that a private insurance company would pay.”

    Medicare works in a way where those who have coverage see a health care provider, and, in order to get paid, providers submit invoices to CMS after care is provided. As mentioned above, providers who accept Medicare are being paid “typically less.” This means in order to offset the loss from seeing a Medicare beneficiary, they must raise rates on others.

    Again, Medicare, for those who have proper coverage and use the system prudently, is a fantastic system, but the strings that come with it may just wind up giving the federal government complete control of not only the healthcare system, but who pays what too.

    In the end, if these political pundits and politicians get their way and Medicare for all becomes the rule, the federal government will be able to increase surcharges on top of moderately high to high income earners while dictating which physicians get paid.

    Who does Medicare for all really benefit?

     

     

     

    Dan McGrath

    Dan McGrath is considered to be a leading authority on the subject of how health related costs in retirement will affect both retirement as well as the overall the financial planning process. Mr. McGrath has also authored the bestselling retirement planning book “What you don’t know about retirement will hurt you” as well as “Medicare: A Practical Guide to Understanding Your Health Coverage in Retirement”. http://www.jesterfinancial.com

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