Politicians of every stripe have recently turned up the rhetoric on proposals to revamp our health care system, especially potential contenders for the 2020 presidential race. Some, including Senators Bernie Sanders, Cory Booker, Elizabeth Warren, Kamala Harris, and Kirsten Gillibrand, have called for a Medicare for All plan; others, including former New York City mayor Michael R. Bloomberg andformer Starbucks CEO Howard Shultz have noted a Medicare for All plan would be unaffordable, and still others, including President Trump have dubbed Medical for All to be socialism. In a veiled rebuke of Medicare for All, the President noted in his State of the Union speech that America “will never be a socialist country.”

While the candidates are not entirely clear on exactly what Medicare for All entails, it is clear that a political free-for-all is brewing over our health care system.

According to a January 2019 survey by the Pew Research Center, the state of our health care system is among Americans top concerns. The Pew survey found “… the domestic issues of reducing health care costs (69 percent top priority) and improving the educational system (68 percent) now rank among the top tier of public priorities. About two-thirds also say that taking steps to make the Social Security (67 percent) and Medicare (67percent) systems financially sound are top priorities for the country.”

Similarly, another January 2019 survey by the Kaiser Family Foundation (KFF) found most Americans are in favor of a Medicare for All plan until they consider the costs. In the KFF survey, a majority of respondents (71 percent) said health insurance is a right for all Americans; 67 percent also favored eliminating health insurance premiums. When asked questions related to the economic consequences of a Medicare for All plan, though, respondents turned negative. The survey found a majority of Americans are opposed to a Medicare for all plan if it would: eliminate private health insurance companies (58 percent opposed); require most Americans to pay more taxes (60 percent opposed); threaten the current Medicare program (60 percent opposed); or lead to delays in getting medical care (70 percent opposed).

Costs of Medicare

As of January, I became a coerced, card-carrying member of the Medicare Insureds Club of America, so I am now keenly interested in the future of Medicareand its cost. According to Martin N. Jabaut, Sr., vice president of the Jabaut Insurance Agency in Plattsburgh, “the actual premium of Medicare (health insurance) for the individual is always either misunderstood or underestimated. During the individuals’ working years they as well as their employers will make contributions for their future Medicare cost.”  Also, according to Mr. Jabaut and as posted on medicare.gov, “the current basic costs of Medicare are: (1) the monthly premium for Part A (hospital) of $437.00, which is waived if the individual has worked 40 quarters and (2) the monthly premium for Part B (doctors) of $542.00 of which the individual pays 25 percent (currently $135.50) or higher if the individual is a high-wage earner.” So, the full actual current cost of an individual plan is $979.00.

That $979 premium includes no dental, no vision, no prescription drugs, and no hearing aids, or stuff like that. Oh, and by the way, it does not cover 100 percent of doctors and hospitals; figure about 80 percent, and there’s no cap, either. Given those facts, it’s not hard to understand why Part A (hospitals) of the Medicare trust fund is projected to become insolvent within about seven years. The 2018 Medicare Trustees report notes “current-law projections indicate that Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers …. In the year of asset depletion, which is projected to be 2026 in this report, HI [hospital insurance] revenues are projected to cover 91 percent of program costs.”

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Double financial whammy for retirees

In the future, retirees could face a double financial whammy of increased premiums for Medicare and reduced Social Security retirement benefits. Besides the looming depletion of the Medicare Part A (hospitals) trust fund, the costs for Part B (doctors) and Part D (prescription drugs), which are referred to as Supplementary Medical Insurance (SMI), have been growing faster than retirees’ incomes (see chart). The 2018 Medicare Trustees report also notes, “a growing proportion of most beneficiaries’ Social Security and other income would be necessary over time to pay total out-of-pocket costs for SMI, including both premiums and cost-sharing amounts.”

As discussed in my previous column, the Social Security Trust Fund is projected to be depleted in 2034; after that, Social Security will only have enough funds to pay about 75 percent of the benefits promised under current law. Unless Congress and the President act very soon, retirees are likely to face a double whammy of reduced Social Security retirement benefits and increased health care costs.

Mr. Jabaut’s “fear is that our system, once changed to a single-payer run program, will greatly effect choices my grandchildren will have for their care and their children.  Single payer does not equate to lower cost, it just means one entity is paying the bill.  Usually it then becomes a line item in a budget.” 

More questions than answers

Between now and the 2020 elections, we are likely to be bombarded with more-and-more confusing political rhetoric about Medicare for All, which islikely to raise many questions and provide few answers. If you are becoming eligible for Medicare any time soon and are looking for some answers, then you should attend one of Mr. Jabaut’s monthly meetings in Plattsburgh, Saranac Lake, Malone, Massena and Canton.  For more information, you should contact the Jabaut Insurance Agency at 518-561-6100 to find out the time and place of those meetings.

Here’s to your health!