Is Medicare for All the right solution?

With Congress killing any chance for healthcare reform within the United States for now there seems to be a push for a single payer system to be the solution and within that solution there is a cry of Medicare for All to solve the nation’s healthcare issues.

On the surface, this may appear to be a perfect fit. Medicare is ultimately a version of a single payer system because the federal government controls costs and oversees the administration of it.  However, it still requires private companies to help on the delivery and payment side of the care (e.g. Medicare Advantage plans and Part D prescription drug plans), but if we look at the costs the savings may not be that be much for subscribers.

Yes, when a person retires and qualifies for Medicare one section of Medicare is free, Part A. This is the part that covers hospitalization. The fact is it is not really free, as that person has paid into the system through taxes from their employment. For those who do not qualify for Medicare Part A, they can still subscribe but will have to pay a premium which, in 2019, is $437.00 a month per person.

This unfortunately is not the only cost associated with Medicare, as there are multiple parts to the coverage.  In order to cover physician’s visits, one must also enroll into Medicare Part B which also comes with a premium. In 2019 that premium is $135.50 a month per person.

Please note that both Medicare Part A and B also have other charges like co-pays, deductibles and possible excess charges. Those may be covered by a supplemental policy (private insurance), but with additional coverage comes an additional cost.

A supplemental policy is often referred to as a Medigap Plan. To be fully insured through this supplemental policy one would need to purchase a MediGap Plan F policy which, on a national average in 2019, is about $210.12 a month per person.

Then there is also a cost to cover prescription drug costs as well through Medicare’s Part D.

For those who are of average health this cost on national average is about $46.72 a month. The bad news about this Part D coverage is that it also comes with co-pays and deductibles that cannot be covered by another standalone policy. Therefore, subscribers may have to pay out of pocket as they use their medications.

The total cost for Medicare for just one person under this plan to provide Medicare for All, using current Medicare premiums, would be approximately $618.00 a month (which does include having to pay for Part A).

If a person opted to be fully insured against deductibles and co-pays by using a Medigap Plan F policy, then their costs would be closer to $830.00 for just themselves.

Now, please note that, there is still a silver lining as these costs are for a person who is 65 years of age. One would expect that the costs would be adjusted down as younger people would most likely be less expensive to cover, and may utilize the system less. But please consider the fact that Medicare is means tested as well.

Medicare, through its Income Related Monthly Adjusted Amount (IRMAA), places a surcharge on those who happen to be earning to much income for their Medicare Part B and D premiums.

In 2019 the income brackets, which have been set a high rate, $85,000 for individuals and $170,000 for couples, are tiered.  Meaning once you go $1.00 over the single or couple income limit, the first surcharge is 40 percent more on top of the current Part B and Part D premiums.  The maximum surcharge is an extra 240 percent.

For those individuals who happen to be earning just one dollar too much in terms of the current Medicare IRMAA brackets they could see their total costs rise to $883.00 a month per person.

Those that are deemed affluent, who happened to earn the maximum income, their healthcare coverage premiums would be close to $1,350.00 a month per person.

These costs, as they stand before any regulatory changes are much higher than what the average person is reportedly paying per month.

According to Kaiser Family Foundation, in 2013 the average monthly premium per person in the individual market across the nation was $235.27.  This may be somewhat less than what the average Medicare subscriber pays today, depending on what additional coverage to Medicare Part A and Part B (original Medicare) one selects.

Medicare is a fantastic system for those who have paid into it and who are currently fully insured.  For those who are considering it to be a quick and simple universal system, there may be a lot more to it than meets the eye.  They should go back and calculate the monthly amounts as described above as well as understand what Medicare’s IRMAA surcharges really are.

Yes, it would be nice to have a simple effective system that all can have access to for health coverage, but, the solution of Medicare for All, as it currently stands, may not be the best solution right now.

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