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Thursday, October 21, 2021

Medicare Cost Shifting: The Next Big Worry for Seniors

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By David W. Thompson

Seniors can breathe a little easier now that Social Security benefit cuts are no longer part of this year’s Federal Budget debate. But, the other shoe hasn’t dropped in Washington yet. That would be Medicare cost shifting.

Earlier this year, President Obama’s Administration ditched one of its worst retirement policy ideas, the “Chained CPI’ for Social Security cost-of-living adjustments (COLAs). But, we do not know if the President or lawmakers will renew efforts to shift a higher share of Medicare costs to Seniors as part of budget talks this next session.

Healthcare costs already eat up a sizeable part of Social Security benefits for many Seniors. So, if Medicare out-of-pocket costs jump up while COLA increases hold steady at their present levels or NO increases at all, Medicare beneficiaries will be taking one step forward and two steps back.

The President proposed adopting the chained CPI in last year’s budget plan as a bargaining chip for deficit reduction. A chained CPI would reduce Social Security by 3/10 of a percent annually. This sounds small, but snowballs over time. After ten years, your Social Security would be cut 3%, 6% after 20 years, etc.

Meanwhile, advocates for Seniors are waiting to learn if the Current Administration or Lawmakers will again serve up proposals from last year’s budget that would shift a greater share of Medicare costs to Medicare beneficiaries as a way to balance the budget and help the depleting Medicare Trust Fund.

Healthcare consumed nearly 15% of the average Medicare Household’s budget in 2010 according to Kaiser Family Foundation.

The bite will be deeper in the years ahead if the cost of healthcare jumps. The Monthly Part B premium, for example, is holding steady for 2015 at $104.90 and it is actually down from its peak of $115.40 in 2010. But, healthcare experts are not ready to declare a long-term victory in the battle to contain healthcare expenses or affordability.

The Current Administration has proposed:
• Higher Deductibles: The Part B Annual Deductible, currently $147 would be boosted for new enrollees in 3 $25 increments, for a total of $75 by 2021.

• Medigap Surcharge: New Beneficiaries who buy a Plan C or F Medicare Supplement Policy would face a surcharge equal to 15% of the average Medigap premium.

• Higher Home Health Charges: New Beneficiaries would pay $100 for five or more Home Health visits not preceded by a Nursing Home or Hospital stay.

The President’s idea behind these cost-shifting measures is “More skin in the game”. The notion is asking patients to pay more will make them savvier consumers more likely to cut out wasteful use of Healthcare Services.

At any rate, Medicare Beneficiaries already have plenty of “skin in the game”. 37% of the average Social Security check went for Healthcare in 2010, up from 21% in 1992 according to a recent analysis of Medicare records by Social Security Works, an Advocacy Coalition.

*This sponsored post was written by David W. Thompson, MSAA. He is the principal agent and financial advisor of Thompson Insurance & Financial Services. He has been working in the insurance and financial services for over 15 years helping Vermonters to secure their future. For more information please visit them at: www.thompsonvt.com

*Securities offered through and supervised by Wilbanks Securities Inc. Member FINRA & SIPC. 4334 NW Expressway Suite 222 Oklahoma City, OK 73116, 1-888-842-0202

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