Medicare to End 1/1/2021

[beachFool]

2021 vision and the old man at the bar

"...actually you might call it a tavern..."
To Beat the Devil, Kris Krisstofferson

www.waltonsun.com

2/4/2011

In ?To Beat the Devil,? Kris Kristofferson relates a chance encounter with an older patron at a Nashville tavern. I get the feeling neither one of them was there on a field trip. Aging gracefully has caused me to develop a rule about bars: Once it gets late (for me, after 10), I will not be the oldest man at the bar. For the record, when the Shadowboxers played at Pandora?s, there were older folks in the audience. I checked it out.


Being the oldest man at the bar does not mean the end of the world. Sure, there are worse things to endure. Being struck by a bolt of lightning comes to mind. Paying for health insurance with a voucher could be another. The Congressional Budget Office reviewed Paul Ryan?s (R-Wis.) Roadmap for America?s Future and admitted Medicare spending would decline ? in 2021. The CBO ominously notes, ?? spending for health care and the uncertainty surrounding that spending would increase.?


Per Ryan?s plan, on Jan. 1, 2021, the current Medicare program will shut down for new enrollees. Guess who turns 65 two days later? Currently we pay right at $8,000 annually for individual health insurance. Assuming 15 percent health insurance inflation in 10 years, the premium will be more than $30,000. Thank you sir for your voucher. We will need it.


Being the astute planner, I included additional health care costs beginning in 2021. With a few deft keystrokes, I adjusted our plan for Rep. Ryan?s proposal. Not a pretty picture; my additional expenses were for a worst-case scenario. I did not envision the elimination of Medicare.


The medical care cost spiral is unsustainable, and eliminating Medicare will certainly reduce government costs. Beware of the law of unintended consequences. You can forget retirees buying South Walton real estate. Five-figure health insurance premiums and swanky retirement digs are mutually exclusive for all but the uber-wealthy.


I flipped open ?Choosing our Nation?s Fiscal Future? to the discussion on Medicare. I have shared excerpts in earlier columns; this report should be essential reading. Keeping Federal health spending equal to GDP growth (zero net growth) means initiating ?tough cost controls in the near and medium term? ? and we must implement them immediately.


I thought our country had a budget problem. To reiterate, Ryan?s plan does not significantly reduce federal medical costs until 2021. Ryan shrewdly does not want to alienate a consistently voting demographic like current Medicare recipients.


The CBO warns these sweeping changes would ripple through insurers and health care providers with possible lower reimbursements for doctors and hospitals. The report predicts fewer services available and consumers should expect less technologically advanced treatments.


Everyone should plan for unexpected health care expenses during retirement. Ryan?s Roadmap adds another wrinkle ? bankruptcy and asset protection.


?To Beat the Devil? closes with ?? the truth remains that no one wants to know.? The more I listen to that tune, the better it sounds.


Find Ryan?s Roadmap at http://www.roadmap? . republicans.budget.house. gov.

Choosing our Nation?s Fiscal Future is at www. nap.edu.


Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@ LivingstonFinancial.net? .

BUZ LIVINGSTON
Just Plain Talk

 

[Geo]

I enjoy your writing, Buz.

 

[30ashopper]

We do not have a choice as to whether Medicare will change from its current structure. It is being driven to insolvency. An honest debate requires a serious discussion of how Medicare will avert its collapse and be made sustainable. Unfortunately, but not surprisingly, the Democrats' political machine has attacked my contribution to this debate, making the false claim that the only solution put forward to save Medicare would "end Medicare as we know it."

The CBO has said that my reform plan, "A Roadmap for America's Future," would put Medicare on a sustainable path. The plan protects and preserves Medicare for those enrolled now and for those who will become eligible in the next 10 years, while reforming the program to ensure it will be there for younger generations. Future seniors would have access to the same coverage I enjoy as a congressman.

Far from the claims of "radicalism," this proposal is based on a key reform from the National Bipartisan Commission on the Future of Medicare, chaired by then-Sen. John Breaux (D-La.). That commission in 1999 recommended "modeling a system on the one Members of Congress use to obtain health care coverage for themselves and their families."

Future Medicare beneficiaries would receive a payment to apply to a list of Medicare-certified coverage options. The Medicare payment would grow every year, with additional support for those who have low incomes and higher health costs, and less government support for high-income beneficiaries. The most vulnerable seniors would also receive supplemental Medicaid coverage and continue to be eligible for Medicaid's long-term care benefit.

If we act now, we can avoid disruptions for current seniors while advancing patient-centered reforms so Medicare will be strengthened for future beneficiaries. The alternative is the European-style death spiral of the welfare state: kick the can down the road as our debt explodes. Under an ever-expansive, all-consuming central government, costs will be contained with Washington's heavy hand imposing price controls, slashing benefits and arbitrarily rationing seniors' care.

The Democratic leadership will seek to brand every Republican running for office with my road map. Ironically, if Democrats succeed in demagoguing to death efforts to save Medicare, that political victory will hasten the program's end. While I am proud to have 13 House Republicans co-sponsor the legislation, and have been overwhelmed by the support outside the Beltway, my plan is not the Republican Party's platform and was never intended to be. This proposal is my sincere attempt to break the political paralysis on entitlement reform, to show that this challenge can be met -- mathematically and politically -- and to challenge those who disagree with my proposal to offer their own.

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/12/AR2010081204918.html

 

[beachFool]

Paul Ryan - A road map to saving Medicare

Rep Ryan is sugar-coating how steep the cuts will be because he knows you can fool some people all the time.

Under his plan my wife and I will get a voucher to pay for a $30K health insurance premiums. These are real numbers.

Ryan's plan will make Medicare sustainable because the program is eliminated.

"Individuals who become entitled to receiveMedicare after 2020 would not receive coverage through current Medicare program but instead would be given a voucher to purchase private health insurance. Federal spending for vouchers would grow for only 3 reasons the presribed rate of increase, growth in eligible populations and the aging of Medicare population over time."

From the CBO report which Rep Ryan has taken down from his website.

http://www.cbo.gov/ftpdocs/108xx/doc10851/01-27-Ryan-Roadmap-Letter.pdf

On page 2 of the CBO report the voucher will only be for $5900 (2010 dollars).

Medicare can certainly be fixed with severe cuts.

 

[30ashopper]

Rep Ryan is sugar-coating how steep the cuts will be because he knows you can fool some people all the time.

Under his plan my wife and I will get a voucher to pay for a $30K health insurance premiums. These are real numbers.

Ryan's plan will make Medicare sustainable because the program is eliminated.

"Individuals who become entitled to receiveMedicare after 2020 would not receive coverage through current Medicare program but instead would be given a voucher to purchase private health insurance. Federal spending for vouchers would grow for only 3 reasons the presribed rate of increase, growth in eligible populations and the aging of Medicare population over time."

From the CBO report which Rep Ryan has taken down from his website.

http://www.cbo.gov/ftpdocs/108xx/doc10851/01-27-Ryan-Roadmap-Letter.pdf

On page 2 of the CBO report the voucher will only be for $5900 (2010 dollars).

Medicare can certainly be fixed with severe cuts.

Lets go over your claims one data point at a time ok? You put forward 15% appreciation of healthcare costs over ten years, and your current costs are eight thousand? Your numbers don't add up, unless you were referring to annual appreciation. Could you clarify?

 

[beachFool]

Lets go over your claims one data point at a time ok? You put forward 15% appreciation of healthcare costs over ten years, and your current costs are eight thousand? Your numbers don't add up, unless you were referring to annual appreciation. Could you clarify?

I didn't say a word about health care costs.

Over the last three years our health insurance premiums have increased MORE than 15% annually.

Our health insurance premiums are currently slightly under $8000.

Assuming a conservative 15% inflation rate for health insurance premiums, the premium will be $30K just in time for our $5900 voucher.

According to my interpretation the voucher is not indexed for inflation.

I ain't perfect but you probably don't want to get into a numbers arguement with me....;-)

My CPA wife chided me for using a low (15%) health insurance inflation rate. If we used the actual rate our premiums have increased the result would have been higher.

Spend a little time with the CBO report instead of parroting Ryan's talking points.

You are younger than me...so you will be in the same boat.

 

[30ashopper]

I didn't say a word about health care costs.

Over the last three years our health insurance premiums have increased MORE than 15% annually.

Our health insurance premiums are currently slightly under $8000.

Assuming a conservative 15% inflation rate for health insurance premiums, the premium will be $30K just in time for our $5900 voucher.

According to my interpretation the voucher is not indexed for inflation.

I ain't perfect but you probably don't want to get into a numbers arguement with me....;-)

My CPA wife chided me for using a low (15%) health insurance inflation rate. If we used the actual rate our premiums have increased the result would have been higher.

Spend a little time with the CBO report instead of parroting Ryan's talking points.

You are younger than me...so you will be in the same boat.

? In 2021, when enrollees would first receive the voucher, the average voucher for 65-year-olds would be worth $5,900 (in 2010 dollars), as specified by your staff.

? The voucher would be adjusted to reflect the age and health status of enrollees. If all Medicare beneficiaries (including older people with higher average expenditures) were to receive a voucher in 2021, the average voucher amount would be $11,000 (in 2010 dollars).

The amounts of the Medicare voucher, the subsidy for low-income Medicare beneficiaries, the federal funding for Medicaid, and the tax credit for the purchase of health insurance would all be indexed to grow at a rate halfway between the general inflation rate, as measured by the consumer price index for all urban cosumers (CPI-U), and the rate of price inflation for medical care, as measured by the consumer price index for medical care (CPI-M).​

Maybe you should have taken your own advice.

According to the cbo report, the amounts are in 2010 dollars and are indexed at a rate higher than inflation and takes increasing health care costs into account. Note the $5900.00 voucher value is in 2010 dollars, but won't be paid out until 2021.

Obviously the index value would need to be tweaked so that people aren't stuck with what a major tax increase through healthcare. However, limiting what people can spend on a product is a very effective way to limit costs. Which is why a plan like this can be very effective at bringing healthcare costs down over time.

 

[30ashopper]

Snapshots: Comparing Projected Growth in Health Care Expenditures and the Economy - Kaiser Family Foundation

Also, as far as growth in costs go, the average is much less than 15% according to this report by the Kaiser Foundation.

 

[beachFool]

OK.


Nonetheless, what you and Ryan are overlooking is health insurance premiums are increasing more rapidly than the CPI (at least at my house).

Plus these are INDIVIDUAL policies, not group. Individual health writing for elderly people will be problematic, to say the least.

What do you think individual underwriting will be like for 80 year old who survives open-heart surgery?

What will that premium be?

I'll tell you.

$30,000 at age 65

$244,000 at age 80

That assumes no changes in underwriting and 15% inflation.

If you think buying individual health insurance when you are 65 is economically sound then you may get your chance.

If Ryan's plan is such a good idea, why don't we implement it today?

Because it is easier to sugar-coat the simple fact that his plan ends Medicare.

Voila, the problem goes away. We agree on that issue.

 

[30ashopper]

On page two of the report, there is an inference about inflation adjustments but nothing concrete.

Nonetheless, you what you and Ryan are overlooking is health insurance premiums are increasing more rapidly than the CPI.

http://www.cbo.gov/ftpdocs/108xx/doc10851/01-27-Ryan-Roadmap-Letter.pdf

The cbo report, search for the part on 'CPI-M'.

Plus these are INDIVIDUAL policies, not group.

What do you think individual underwriting will be like for 80 year old who survives open-heart surgery?

What will that premium be?

I'll tell you.

$30,000 at age 65

$244,000 at age 80

Are you taking into account the new premiun caps ObamaCare implemented?