The never-ending discussions on reducing government spending are targeting Medicare. Seniors must pay more for their medical care, or they will use the health care system too much. Several plans have been proposed to force seniors to pay more and rely less on Medicare supplement insurance (a.k.a. “Medigap”).
About 50% of people on Medicare have some form of Medicare supplement insurance, through an employer retirement plan (31%) or an individual Medicare supplement policy (19%). Another 21% of Medicare beneficiaries are enrolled in Medicare Advantage. These figures are based on 2008 data from Medicare.
Medicare supplement policies fill the gaps in Medicare and pay some or all of the co-insurance and deductibles that are built into Medicare. The most popular Medigap plans are plan F, which fills all the gaps, and Plan C, which covers everything but the excess charges. So seniors with these plans pay their monthly Medicare premium and their Medigap premium, and don’t have to worry about medical bills when they get sick. New rules being proposed for Medigap plans would not allow this kind of “first dollar coverage”.
Apparently, some actuary has determined that seniors should expect to pay out between $3,000 and $5,000 per year in medical costs. So they should not be allowed to protect themselves from those costs with insurance. For example, a person who pays $150 per month for a Plan F Medigap can figure that $150 x 12 months = $1,800 per year to cover their medical expenses. This is a lot less than $4,000 or $5,000 that is part of several proposals being considered in Washington.
As an insurance agent, I recommend a Plan F Medigap, but I guess I am part of the Medicare budget-busting problem. Some of my clients live in gated communities and can certainly afford their Medigap premium, or an extra $5,000 each year for medical expenses. But most of my Medigap clients live very modestly, and I don’t know if they can afford to put out $5,000 every year for medical bills.
I recently read that about half of Americans who are over 65 have less than $50,000 in savings. The millionaires who serve in Congress think these seniors with very limited savings will be able to find extra money for their medical care. I guess they should know. These ideas on deductibles and higher co-pays slowing down the use of the health care system are straight from the for-profit insurance industry. It is called “consumer-driven heath care”. What it means is that the government doesn’t ration the care people get – seniors will ration their own care based on how much they are willing or able to pay. What a system!