Showing posts with label proposed changes to Medicare. Show all posts
Showing posts with label proposed changes to Medicare. Show all posts

Wednesday, March 1, 2017

Medicare Changes Planned by Congress

There is a great deal of nervousness and confusion surrounding changes to Medicare in the coming years.  In fact, many retirees and working adults near retirement age do not realize these changes were already set in motion in 2014 and, unless something happens to stop them, they could dramatically change the way people on Medicare receive their benefits.  As a result, I did more research on the current plans, the changes which are coming and, finally, I consulted AARP through their Facebook page to get clarification on exactly what is being proposed.

What are the Current Medicare Choices?

Currently, Medicare recipients have three choices for receiving their benefits.

1.  Basic Medicare only - Medicare pays about 80 percent of approved costs for hospitalization and doctor visits, including a short period of time in a skilled nursing or rehabilitation facility each year, when medically appropriate.  The medical procedures, lab tests and care which Medicare will cover are specified as defined benefits.  The beneficiary pays the cost of anything not covered by the government fixed benefits.

2.  Basic Medicare plus a supplemental insurance policy - This is currently the most popular choice for the majority of retirees, with beneficiaries using basic Medicare as their primary insurance carrier and buying a supplemental policy as a way to cover the 20 percent of their medical bills which are not covered by basic Medicare.  Beneficiaries pay a premium for their supplemental policy.  The premiums vary widely depending on the size of the co-pays and deductibles.

3.  Medicare Advantage plans - These plans are currently a type of voucher system with both a defined benefit and a defined contribution from the government.  Medicare pays a monthly premium (defined contribution) to the insurance company you choose, and the insurance company takes care of covering your medical care (defined benefit).  You may find a policy with either no additional premiums or which only have a small additional premium over the government's defined contribution.  You do not deal directly with Medicare; you only deal with your doctors and chosen insurance carrier.  Under a Medicare Advantage Plan, you have a defined benefit.  This means your policy has to cover AT LEAST all the benefits you would receive under basic Medicare.  It also has a defined contribution, which is the size of the voucher the government pays your insurance carrier.

What Would Be Different Under the Proposed Medicare Changes?

Essentially, under a 2015 House Budge Resolution which came out of a committee headed by Paul Ryan and was passed by the House of Representatives in 2014, Congress would like to drop the government's responsibility for guaranteeing a basic level of medical care for all senior citizens.  Medicare beneficiaries would no longer be assured they would have defined benefits.  Instead, ALL beneficiaries would be switched to a voucher system where they could purchase a Medicare plan which is either fee-for-service or from a private insurance carrier.

The government would no longer guarantee that seniors would be entitled to specific medical benefits.  You would pick an insurance company which could offer a range of choices, depending on how much you are willing to pay in additional premiums, above the government voucher.  As a result, the poorest Medicare beneficiaries are the people most likely to choose policies with no additional premiums. This means they could have high co-pays, high deductibles, fewer choices in physicians and fewer benefits.  AARP is concerned the poorest people could end up deeply in debt in order to cover medical expenses they incur late in life.

Analysis by the National Committee to Preserve Social Security and Medicare

One organization which is following this issue carefully is the National Committee to Preserve Social Security and Medicare.  Below is a excerpt from their website:

"The House Budget Resolution for Fiscal Year 2015, H. Con. Res. 96, introduced by Budget Committee Chairman Paul Ryan (R-WI), was passed by the House of Representatives on April 10, 2014.  It would end traditional Medicare, make it harder for seniors to choose their own doctors, and increase health care costs for both current and future retirees.  The House Republican budget ends traditional Medicare and achieves savings for the federal government by shifting costs to Medicare beneficiaries.

Privatizing Medicare with Vouchers/Premium Support Payments

Beginning in 2024, when people become eligible for Medicare they would not enroll in the current traditional Medicare program which provides guaranteed benefits.  Rather they would receive a voucher, also referred to as a premium support payment, to be used to purchase private health insurance or traditional Medicare through a Medicare Exchange.  The amount of the voucher would be determined each year when private health insurance plans and traditional Medicare participate in a competitive bidding process.  Seniors choosing a plan costing more than the average amount determined through competitive bidding would be required to pay the difference between the voucher and the plan's premium."

This means seniors who live in areas where medical insurance costs more, or those who have expensive medical needs could end up paying higher premiums to make up the difference. In addition, low-income retirees could be forced into networks with limited physician choices. 

In truth, no one is quite certain what effect this change from a defined benefit plan to a defined contribution plan, with limited government responsibility, will have on future and current retirees.  However, the reason the government is doing this is to shift the burden of paying for the medical care of retirees from the government to senior citizens.

Analysis by AARP

As mentioned above, I had a discussion with AARP on their Facebook page about the changes.  Below is a quote from that discussion:

"Hi Deborah, there's a lot of tricky language surrounding this issue, so I'm happy to help make sure it's clear: Under a voucher system, the federal government would replace Medicare beneficiaries’ guaranteed benefit package (the current system) with a fixed dollar amount or “defined contribution” that beneficiaries would apply toward a health plan they chose. You would apply your fixed-dollar-amount voucher on competing private health plans or traditional Medicare fee-for-service coverage. One major concern is that this voucher system ends the promise of a guaranteed set of Medicare benefits and could have higher risk of catastrophic out-of-pocket medical expenses for Medicare beneficiaries with lower incomes who would pick the lower-priced plans that could have high deductibles, limited benefits and restrictive provider networks. Here's the report from the AARP Public Policy Institute that breaks down exactly why this proposal could hurt seniors: - Caroline D."

Highlights of The AARP Public Policy Institute Report 

According to the report mentioned in the paragraph above, the concerns of AARP about this Congressional plan are quoted below:

  • Premium support could end the promise of a guaranteed set of Medicare benefits
  • Beneficiaries in traditional Medicare could pay more
  • Premium support could shift more costs to beneficiaries over time
  • Most Medicare beneficiaries cannot afford to pay more for their health care
  • Premium support could lead to reduced access and higher risk of catastrophic out-of-pocket medical expenses for Medicare beneficiaries with lower income
  • Premium support assumes that beneficiaries are willing and able to make complex health care coverage decisions

How to Let Congress Know Your Opinion on These Changes

Since the above changes to Medicare have already been passed by the House of Representatives and are supported by the majority of Republican members of the Senate, they are likely to become law unless the American public lets their voices be heard.  If you want to keep the current defined benefit Medicare plans, rather than change to a voucher system and variable benefits, it is essential for every American to let the president and Congress know how you feel.

You can email the U.S. president at:

Contact your Representative at:

Contact your Senators at:

Join AARP and support their lobbying efforts at: 

This may not be the last attempt to undermine our Social Security and Medicare benefits.  You can stay current and contact your Congressional Representatives about ALL the bills which come before Congress on the non-Partisan site called Countable:

If you are interested in staying up-to-date on retirement information, discover where to retire, learn about common medical issues, or more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional useful articles.

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Tuesday, January 10, 2017

Proposed Changes to Medicare

At the beginning of 2017, over 57 million American citizens, or approximately 15 percent of the U.S. population, relied on Medicare for their health insurance coverage.  With more than 10,000 people turning age 65 every DAY, this number is expected to grow in the coming years.  According to a poll by Kaiser Permanente Healthcare, which offers a popular Medicare Advantage program in some states, 77 percent of people consider Medicare a "very important" program.  Despite its popularity, Congress is fast-tracking their own proposals to privatize Medicare within eight years.

What Changes Does Congress Want to Make to Medicare?

Since the time Medicare was established in 1965, it has always been a "defined benefit" program, which means they guaranteed a certain level of health coverage.  When the Affordable Care Act was passed, the defined benefits were improved to include free preventive services such as flu shots and screenings for diabetes and cancer.  Under the current program, Medicare pays for 80 percent of the cost of doctor and hospital visits.  The beneficiaries either pay for the remaining 20 percent out-of pocket or they use a private insurance company in the form of a supplemental insurance policy or Medicare Advantage plan to cover most of their remaining expenses.

Congress is now considering changing from a "defined benefit" program to a "defined contribution" plan.  Their plan could also be called a voucher system.  Under the proposed plan, the government would give people a voucher to help with the cost of their insurance premiums, forcing senior citizens to shop for their own private medical insurance.  In addition, Congress wants to increase the eligibility age from 65 to 67.  Their goal is to limit how much the government spends on Medicare, despite the fact that nearly all U.S. citizens have been paying into Medicare their entire working lives ... some of them for decades.

What this new plan would do is put the responsibility for obtaining insurance on the backs of senior citizens.  The government would give you a voucher which you could use to pay for a discount on a private insurance policy, which you would be responsible for finding.  You would then have to pay any difference between the value of the voucher and the actual cost of your insurance premiums.  There would be no guarantee that the government voucher would cover a specific percentage of your insurance premiums.  In addition, you would be responsible for whatever deductibles and co-pays are required by your new insurance plan.  It is possible that seniors who cannot afford to pay these extra expenses would simply go without insurance or would buy the cheapest insurance with the highest deductibles.  This could cause them to avoid obtaining medical care except in the most extreme circumstances.

People over the age of 60 would be able to stay with traditional Medicare.  However, the new plan would gradually decrease the benefits and increase the costs which beneficiaries must pay.  The goal is to eventually "encourage" current Medicare beneficiaries to switch to the voucher program.

Could President Trump Veto the Proposed Changes to Medicare?

The only way to stop the above changes from going into effect would be if public pressure causes Congress to change its mind, or if President Trump vetoes the changes after Congress passes them.  While he was running for office, Trump was quoted at a rally in New Hampshire as saying, "Every Republican wants to do a big number on Social Security.  They want to do it on Medicare.  They want to do it on Medicaid.  And we can't do that.  It's not fair to the people who have been paying in for years."  However, recently his website has been changed to say that he is in favor of "modernizing" Medicare, although it is very ambiguous what that means.

On Dec. 4, 2016, on ABC News, the Vice-president elect Mike Pence said that Trump has "made it very clear in the course of the campaign that we're going to keep our promises on Social Security and Medicare."

Despite these statements by the incoming president and vice-president, it is important that U.S. citizens make their feelings known both to members of Congress and members of the new administration.

What are Other Ways Medicare Could be Fixed?

Many experts agree that the Medicare trust fund will need to slightly increase its income and decrease its expenses if it is going to remain solvent.  There are other changes which could be made to Medicare which would extend its life significantly, without privatizing it or doing away with the program.

1.  Keep Obamacare or a similar program.  When the Affordable Care Act (Obamacare) was passed, the cost savings included in the bill meant that the Medicare Trust Fund was able to remain solvent for an additional 11 years.  Obamacare slowed the growth of spending and reduced waste, fraud and excessive payments to care providers.  At the same time, the average beneficiary was able to personally save approximately $1,945 a year because the prescription drug "doughnut hole" was reduced.  These changes, and others, would disappear if the Affordable Care Act is repealed without being immediately replaced with a program which offers the same or similar benefits.

2.  Slightly increase payroll withholding and beneficiary premiums, deductibles and co-pays.  A small increase in revenues would help keep the current Medicare program solvent.  Modest increases in payroll withholding and the premiums, deductibles and co-pays which beneficiaries pay would adequately provide the necessary revenues while protecting the program.

3.  Give Medicare the authority to directly negotiate prescription drug prices.  Approximately one-sixth of the budget of Medicare goes to pay for prescription drugs.  If Medicare could negotiate directly with the pharmaceutical companies, which they would like to do, this would be a major step towards controlling their costs.

How Can Citizens Voice Their Opinions On Medicare Changes?

If you wish to let Congress know how you feel about the proposed changes to Medicare, now is the time to voice your opinion.  In addition, AARP will be lobbying Congress and they need to be able to show that they have the support of the public behind them.  Below is a list of ways you can make your voice heard and help keep our current Medicare system viable:

You can email the U.S. president after the election at:

Prior to his inauguration, you can contact Donald Trump at:

Contact your Representative at:

Contact your Senator at:

Join AARP and support their lobbying efforts at: 

You may also be interested in learning more about the proposed changes to Social Security and voicing your opinion on those issues, as well.  You can learn more about those proposals at:

Proposed Changes to Social Security

If you are interested in learning more about Social Security, Medicare, financial planning, where to retire, common medical problems and changing family relationships after retirement, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

(Info about the proposed changes to Medicare based on a series of articles on Medicare in the January-February 2017 issue of the AARP Bulletin)

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Tuesday, November 24, 2015

How Americans are Aging and Changing

The Baby Boomer generation is getting older and lifespans in general are increasing.  As a result  the United States is aging rapidly.  Recently, I attended "The State of Aging in Orange County," a seminar put on by the Office on Aging and other agencies in Orange County, California.  The speakers were outstanding and over the next few weeks this blog will contain posts on some of the information that was covered during the seminar.

In particular, most Baby Boomers will be interested in some of the general facts that were brought up by the speakers.

Redefining What it Means to be Old

Karen Roper, who is Director of OC Community Services and oversees the Office on Aging, the Veterans Service Bureau and several other agencies, said they are working to redefine what it means to be old.  Rather than basing it on someone's age, they want to define it based on a person's functional ability.  After all, she pointed out, some people can be in their 80's or 90's and still be able to live on their own and take care of their shopping, housework, cooking, etc.  On the other hand, a person who is in their 50's or 60's might be suffering from a number of medical conditions, including early onset dementia, which might make it difficult for them function independently at all.  Which person should be considered "old?"

The U.S. Population is Aging Rapidly

Michael Schrader, the Chief Executive Officer of CalOptima, presented fascinating statistics regarding how quickly the American population is aging.  In 2015, there are approximately 40 million people over the age of 65.  Over the next ten years, by 2025, the population of people over the age of 65 will increase by 50% to 60 million.

Social Security and Medicare Will Need to be Reformed

Mr. Schrader revealed that over that same ten year period, Social Security costs are expected to increase by 77% and Medicare costs by 89%.  This is unsustainable without some types of reforms. As was recently mentioned in this blog, one change has already been made in order to save the government money in Social Security expenditures. It was part of the 2015 budget agreement.  The SSA has now eliminated an option couples used to have for maximizing their benefits ... the file and suspend option. 

Among other changes that are being considered are:

* Raise the minimum ages to receive both Social Security and Medicare benefits
* Increase the co-pays and other forms of cost sharing for Medicare beneficiaries
* Change to a need based voucher system for Medicare benefits

New Approaches to Administering Medicare and Medicaid

CalOptima is also experimenting with a new system to make Medicare benefits more efficient, cost effective and easier to use for beneficiaries who qualify for both Medicare and Medicaid (known as Medi-Cal in California).  Many of the people who qualify for both have to deal with four different programs ... Medicare Part A, Medicare part B, Medicare part D, and Medicaid.  Since these people frequently have dementia or other health issues, dealing with all these different  programs is overwhelming.  CalOptima is experimenting with combining all four of those programs into one, adding on dental and vision services, and providing case carriers to assist the recipients.  They believe that reducing the fragmentation will make the program operate more efficiently and less expensively.  In addition, beneficiaries will only have one phone number to call and one person to deal with, which should make things more manageable.

If the CalOptima program works here in Orange County, it will be spread to other parts of the United States.

In the coming weeks, this blog will contain additional information that was provided during the State of Aging seminar ... interspersed with other topics of interest to Baby Boomers.

If you are looking for additional information on retirement planning, coping with health issues, finding good places to retire, changing family relationships or more, use the tabs or pull down menu at the top of this article to find links to hundreds of additional helpful articles on a variety of subjects.

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