Medicare for 50-Year-Olds

 

Whatever happened to Medicare for All? In the presidential election campaign of 2020, we heard a lot about Medicare for All. Then Joe Biden was elected and since then we haven’t heard much more about it. Is that a forgotten idea?

Biden never actually endorsed Medicare for All, although his running mate, Kamala Harris did. Vermont Senator Bernie Sanders came up with the idea of Medicare for All, but Biden stuck to ObamaCare since he served as Vice-President under President Obama. Biden did promote the idea of adding a Public Option to ObamaCare, an idea unacceptable even to Congressional Democrats when ObamaCare was first debated.

Yet both healthcare plans will lead to socialized medicine over time, since both seek to give the government more control over your healthcare. It’s really only a matter of how quickly that government takeover will happen.

The latest Democratic proposal is called the Medicare at 50 Act, a legislation proposed by Senator Debbie Stabenow (D – MI) and other Senate Democrats. It would make people ages 50 to 64 eligible for Medicare.

Why would people age 50 to 64 want Medicare? That’s the question asked by healthcare economist John C. Goodman. He can think of many reasons they wouldn’t. To understand why this is a bad idea, it’s necessary to know more than most about Medicare.

Goodman tells us Medicare currently spends $11,582/year/beneficiary. Since that’s more than most spend in the private sector, no one would purchase that insurance instead. Although actual costs would likely be lower for younger, healthier adults age 50 to -64, the fair premium for “young seniors” on Medicare is likely to be a lot higher than for comparable private insurance.

It is more than likely that Senate Democrats intend the government to subsidize these new Medicare beneficiaries just as they currently do older seniors. Current Medicare enrollees pay only about 25% of the real cost of Part B services. The other 75% is a gift from the government. This raises the question one might ask, “Why can’t I have that money to deposit in my bank account instead of in the form of insurance subsidies?” This is the right question to ask, given the following facts about Medicare:

Medicare is lousy insurance

Goodman says most people don’t realize there is no cap on catastrophic Medicare A (hospital) costs, unlike private insurance which requires this cap. Medicare Part B (doctor’s fees) also has no cap. Also, to get drug coverage you have to purchase an additional policy (Medicare Part D). The alternative is to purchase Medicare Advantage coverage, which includes drug coverage, but at the cost of losing the freedom to choose your doctor.

Access to telemedicine is now commonplace, since the Trump administration made this available during the Covid pandemic. But this could change easily under the new administration. It was never available in the pre-pandemic era.

No more employer subsidy

Most Americans get their healthcare insurance through their employer. Typically, the employer pays about 75% of the cost. This insurance is usually better coverage than Medicare. The cost of this benefit is naturally passed on to employees in the form of lower wages than they might otherwise enjoy if not for this health insurance benefit. However, it is illegal to ask your employer to give you cash instead of the insurance.

No more tax subsidies

This benefit is not taxed by the IRS. If you have to pay for your insurance apart from your employer, you must pay with after-tax dollars. All Medicare enrollees must do this. If employees age 50 to 64 were now eligible for Medicare, they would be stricken from the rolls of their employer-provided plans and they would have to pay for their new Medicare plan out of their own pockets with after-tax dollars.

No more ObamaCare premium compression

In the free marketplace, premiums for people in their 50s and 60s would exceed premiums for those in their 20s by a factor of 6 to 1. ObamaCare regulations limit this to 3 to 1. Therefore, older adults who purchase ObamaCare policies aren’t paying the full market price. Younger adults are paying more to subsidize older adults. This difference would be lost if “young seniors” leave the market and choose Medicare.

No health savings accounts

Health savings accounts (HSAs) have been shown to lower healthcare costs about 30 percent. But seniors are the only people in our country who are not permitted to have an HSA. It is likely this same restriction would apply to young seniors on Medicare.

With all these disadvantages to enrolling early in Medicare, the prudent choice would be to take the government money spent on Medicare and use it to subsidize private insurance. Goodman estimates that amount could be $8,000 to $9,000 per year. The cost would be about the same for the government, but they would also have less control over your healthcare. Perhaps that’s why that idea is unlikely to gain much traction with Senate Democrats.

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