Medicare age hike to 68 is Heritage GOP plan

The details are in the Heritage Foundation plan to replace Medicare with a “premium support” plan in which you buy Medicare on the open market and the government reimburses you, based on the lowest price from solicited private bids:

During the first five years of the premium-support program, the government’s contribution is based on the weighted average premium of the regional bids of competing health plans. After the first five years, the government contribution is based on the lowest bid of competing plans in a region.

Last week, I blasted the foundation for its miserable plan for Social Security. Their suggestions for Medicare are just as bad. What would such a plan cost, and what would be its benefits to seniors? An examination of a typical Obamacare plan for a single 64-year-old may reveal some answers.

We couldn’t compare plans for 70 or 85-year-olds, because Obamacare won’t allow them for anyone past their 65th birthday. Since someone in their 90s requires more care than the average 64-year-old, whether Heritage blends rates (one rate for all) or age adjusts like Obamacare, premiums could easily be twice as much. What’s the difference, you might ask, if the government pays all the premium cost? Keep reading and learn why.

The cheapest (Bronze) Obamacare plan in Montgomery County, PA this morning was $533 a month for a single person, or $6,396 a year. Under the Heritage plan for Medicare this seems like a likely low-ball comparison – many co-pays, no dental or hearing aids, etc. In addition, there is a

$6,000 deductible for a total expense to one person of $12,396. Just double that for the cost for a couple – $24,792 a year. Some details:

• Emergency room care: $500 Copay before deductible
• Generic drugs: $15 Copay after deductible
• Primary doctor: $50
• Specialist doctor: $100

If you just drive slowly past a hospital today it costs about $12,000. If you walk inside it’s more. Get admitted with other than a cold? Sell your house if you don’t have insurance. The $6,000 deductible (plus the $6,396 premium) you have to pay – before any coverage begins – will probably be in the cards every year for most retired Americans.

And if you think your annual subsidy will be enough to pay for just the premium portion, remember we are dealing with a Heritage Foundation based on conservative (conserving money for the rich) principles, except when they apply to the average person. Under the foundation plan, even if you paid into Medicare for 40 years, you will get reduced premium support if your adjusted income exceeds $55,000, and no premium support if more than $110,000:

Under the Heritage plan, low-income enrollees receive the full Medicare defined contribution. The amount of the defined contribution starts to phase out for Medicare enrollees with annual non–Social Security incomes between $55,000 and $110,000 and couples with incomes between $110,000 and $165,000.

Enrollees with incomes over $110,000 and couples with incomes over $165,000 receive no government contribution and pay full, unsubsidized premiums. As with Social Security, married couples can decide whether they want to qualify for benefits as individuals or jointly as a couple. The phaseout income levels will be inflation-indexed.

The cash value of premium support is reduced for upper-income seniors and eventually phased out for those with the highest incomes.

If you worked hard, saved money and are required to withdraw it as income under Required Minimum Distribution (RMD) from your IRA, you can lose your Medicare premium and pay full freight. You worked. You paid your Medicare tax – maybe twice as much as the average person, and you will get nothing. The $55,000 sounds like big dollars, but this ceiling probably will never increase, just like the $32,000 limit on a couple’s earnings before they pay income taxes on Social Security. That was passed in 1983 and hasn’t been raised since, even though more and more couples reached that limit as inflation increased the past 22 years.

Buried in the document is the real kicker – taking away even the $6,396 a year payment, per person, and leaving you struggling to find a healthcare provider:

..like the Social Security adjustments in retirement age, Medicare’s eligibility age becomes 68 in 10 years and is indexed thereafter for increases in longevity.

Under this GOP plan (most elements were in Paul Ryan’s budget proposal in recent years) you will lose three years of health insurance, worth about $19,000 per person, because the foundation is worried that some folks live longer – thanks to expensive operations and prescriptions that prolong life, but not health. The benefit for the corporate, usually also corpulent, endowed is that most of us will have to work another three years – 65 through 67 -to afford health insurance. That will hike unemployment by increasing the workforce, and thus reduce wages in a more competitive labor market.

Another foundation change is to eliminate any rules requiring doctors to accept Medicare payments and patients:

Beginning immediately, the plan eliminates the statutory and regulatory restrictions on private contracting outside of Medicare that were enacted in the Balanced Budget Act of 1997. There were no such statutory restrictions before 1997. This means that Medicare enrollees can enter into private agreements for medical services with the physicians of their choice with no statutory or regulatory restrictions. For reasons of privacy, or for whatever reasons seem good to them, they can go outside of the Medicare program without being required to submit a claim to the Medicare bureaucracy for the physician’s service.

Who in their right mind would make a special deal with a doctor that eliminated Medicare payments? Perhaps, someone wealthy would rather have a high-priced physician who isn’t bound by certain fees for service. That way, the best doctors will end up treating the “best people”, and the doctors with degrees from far off islands will treat the rest of us.

The height of arrogance is reached in this foundation conclusion:

By moving to a premium-support program, Congress can introduce the powerful forces of consumer choice and competition into Medicare, forcing health plans and providers to deliver value for taxpayer and beneficiary dollars. Similar approaches to health care financing and delivery have been used in … the FEHBP, the program that covers Members of Congress

Members of Congress receive a 75% subsidy (along with all other federal employees) and that applies to the poor and the rich. This Wikipedia chart illustrates why Congress has no clue why increasing Medicare costs, or eliminating it for years, means to the average family: