5 Reasons Why Medicare For All Is Not Such A Great Idea
Medicare for All, or some variation of it, is part of the platform for many candidates running for President in the 2020 election. On the surface, Medicare is a great program. This is true for those who are properly covered and utilize the program efficiently, but there are some potholes that must be considered.
Here are 5 reasons why Medicare for All may not be the best option:
1. The costs because Medicare is not free.
The 2019 Original Medicare premiums are:
- Part A, the hospital insurance for stays in a Medicare recognized hospital, has a premium of $437.00 a month for those who do not qualify for coverage. Those who qualify for coverage did so via employment taxes (Medicare withholding), and therefore do not pay this premium once they enroll.
- Part B, which covers the cost of seeing a physician, is $135.50 a month.
Please note that under Original Medicare, both Part A and B also have additional expenses such as co-pays, deductibles and excess charges.
- Part D, which provides insurance for prescription drugs. In order to obtain coverage while enrolled into Original Medicare, you must purchase a plan from a private insurer. In 2018 the average premium nationally is $46.72 a month.
Please note that with some Part D plans there are co-pays and deductibles. This is a moving target for some because their current plan may not cover a drug they may need later. Obviously, there’s no way to know if or when that happens until it happens.
A supplemental plan or Medigap plan may cover the additional expenses that come with Medicare Parts A and B. In 2019 the national average premium for a Plan G policy is $173.80 month.
On a national average, the monthly premium for those who do not qualify for Medicare Part is $793.02 per person (Parts A, B and D, and a Medigap plan G).
According to the Kaiser Family Foundation in 2018, the average premium for single coverage was $575 per month.
2. You will still need private insurance.
Again, under Original Medicare there still are additional expenses such as co-pays, deductibles and excess charges that could add up. In order to properly insure yourself when it comes to your medications, you need a private insurance policy to cover that expense.
3. There is an unadvertised tax within Medicare.
Currently, Medicare is means tested through the Income Related Monthly Adjustment Amount (IRMAA). Medicare is not concerned about how little or how many assets you have. It is all about the income. Simply put, those who earn more than the base threshold for their income tax filing status will be subjected to added surcharges on top of the current year’s Medicare Part B and Part D premiums.
Income is defined as your adjusted gross income plus and tax-exempt interest you may have. Some examples are: wages, tips, interest, pension and rental income, most capital gains, all dividends, Social Security benefits and any distribution from any tax-deferred investment account.
The IRMAA in 2019 brackets are as follows:
4. Healthcare cost will increase as Medicare is a reimbursement program
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. Those healthcare providers, in order to get paid, submit invoices to CMS after care is provided. Due to Medicare having control of the what gets paid the amount reimbursed to those healthcare providers is typically about 60% less than the what was charged.
According to the American Hospital Association (AHA), in 2016, Medicare reimbursement fell below actual costs by $41.6 billion. This is the specific reason why health costs increase year over year.
Medicare pays out less to the healthcare providers so to offset this loss they tend to increase their rates on others to offset the difference.
5. The federal government will have complete control
The fun fact that is never mentioned when discussing individual state pensions and the odds of them going bust is that one of the bigger costs happens to be the healthcare benefits many retired public employees receive.
Once these retried public employees reach age 65 they are automatically enrolled into Medicare. Due to the structure of past contracts many states have agreed to pay for those retired public employees Medicare premiums (typically Part B).
Consider the state of New Jersey for an example, and yes, it is New Jersey. According to NJ Department of Pensions and Benefits, those who have 25 years of service and who were employed before July 1, 1997 qualify for paid health coverage throughout retirement.
Of the 305,000 public retired employees reported by the Transparency Center of New Jersey, roughly 236,000 of them as of 2018, will be between the ages of 65 to 90. That qualifies them for Medicare coverage.
Of the 305,000 public retired employees reported by the Transparency Center of New Jersey, roughly 236,000 of them, as of 2018, will be between the ages of 65 to 90. That qualifies them for Medicare coverage.
To be fair, the report from the Transparency Center is not specific if every one of these retired public employees qualify for full Medicare coverage. Some may not have worked long enough to qualify for Medicare, or they may have opted to have health coverage through a spouse. Nevertheless. the numbers are frightening.
While public employees may enjoy this retirement benefit, the federal government, via Medicare, may easily increase the Medicare premiums.
Why would that happen?
Premiums may have to increase to offset the demand and many new people covered by a Medicare for all system.
Using New Jersey again as an example, the Medicare premium increases could rise to a point where the state would be unable to afford it and effectively pay for all the other obligations to run the state. At that point, because of this control the federal government would have under Medicare for all, the state of New Jersey will become insolvent.
Granted a state cannot declare bankruptcy, but a Medicare for all scenario could cause tremendous financial harm to the residents of a state like New Jersey. All because of the control the federal government would now have over health insurance.
Again, Medicare is a great program if you follow the rules and understand the nuances, but before implementing it for everyone in the nation, people must consider what is at stake for their personal budgets and for the states they live in.
Perhaps the focus should be on making health insurance and healthcare costs more transparent for those decades away from Medicare eligibility.