The term “medicare voucher” is something you’re probably going to hear quite a lot in the coming months, maybe years. Since Speaker of the House Paul Ryan is currently backing a number of potential Medicare voucher plans, it is not farfetched to assume that this is going to become a big-ticket item throughout 2017 and on into the Trump administration. But what is a voucher, what might it mean for the people, and how possible is this? Today, Ameri Quote will provide some basic, understandable answers to these questions.
Semi-Privatized Medicare Vouchers Explained
Essentially, today’s Medicare system is a closed-curtain benefit that offers most persons over 65 years of age a sort of federalized health care alternative. The purpose of the current Medicare program is to offer a governmental, and therefore by-right, program to many retired and aging Americans that allows them to somewhat circumvent privatized insurance as they enter the most expensive point in their lives to insure. The voucher system, while similar, comes with one major difference that starts from the moment the person receives Medicare benefits and would continue indefinitely. Any person eligible for Medicare would undergo an additional step in which they receive a check for their Medicare benefit, which they could then offer back to the government for the Medicare plan that corresponds with that value; likewise they could essentially “cash out” their Medicare benefit to enroll in privatized benefits instead.
To go a little deeper, the general idea and motivation that conservatives are looking to foster with a voucher system is based around competition. It is their belief that, given the opportunity, the market would evolve to offer better, more affordable options for senior citizens that can compete with Medicare. They claim little downside to the program, as those that wish to remain with their current Medicare coverage could just keep it by essentially returning the check in the form of a “payment” for their Medicare benefit. It is also worth noting that there would be levels to the offered Medicare plans (with the check equally the value of the second-to-lowest plan), this gives people the option to pay up for a more comprehensive Medicare plan or private plan; likewise, they can pay down for less coverage and actually pocket the difference in cash from their premium each month. While not many more details surrounding the plans are available at this time (it is still very much on the drawing board), this would represent the basic structure of current plan.
Opposition vs Alleged Benefits
While the alleged benefit of this system preaches the benefits of competition, many liberals and conservatives alike question the validity here. After all, conservatives are quickly attempting to dismantle the similarly-structured Affordable Care Act that currently serves 30 million mostly healthy people, but this proposed plan would bring about similar challenges for a far less healthy population that exceeds 50 million and is growing annually. The basic point here is simple: If the ACA hasn’t bred healthy enough competition to satisfy conservatives, what makes them believe that the Medicare voucher program would somehow achieve the result in a far more difficult to reach and maintain (not to mention larger) population? If that isn’t enough, liberals staunchly oppose any changes to Medicare out of fear of the insurance industry’s reputation for margin padding over people pleasing. In any case, the debate over this issue is far more complicated than simply saying it boils down to competition vs. governmental autonomy. Regardless, with a Republican majority controlled House, Senate, and White House, it seems unlikely that liberal objections will be able to red light any such plans for long.
For the average American approaching or already within Medicare eligibility, there isn’t a whole lot to worry about – yet. While we don’t know what this means, even if a full plan were drafted and passed before the 2017 spring thaw, the plan still wouldn’t begin to “hit the shelves” until 2022. Even that seems ambitious, as there will undoubtedly be budgetary and raw manpower concerns with launching a major effort on behalf of the federal government for over 50 million people. If something like this were up and running, it seems unlikely that many Americans would see much difference.
If anything, the American people should be concerned that the voucher system’s price match scaling doesn’t keep up with the increased market cost of a flooded insurance industry. What this basically means is simple: Check growth is matched to a preset algorithm for increased Medicare costs over a predetermined amount of time (5 years, for example); any increases the market encounters above or below that rate of price increase will not be enjoyed by beneficiaries. So, if you are able to afford excellent private insurance year one, that may not be true by year three, and by year five you may find yourself clamoring for the old system to afford the same coverage you enjoyed only a few short years before. This could mean that Americans will have to get used to the idea that their retirement-age health insurance costs could rise incrementally over Medicare benefits each year, effectively increasing their payments for the same coverage.
Focus on the Now
In any event, changes are still far off on the horizon and shouldn’t be your primary concern. The current Medicare system allows for a great deal of competition and plan management. For instance, at Ameri Quote in Fort Collins, we offer numerous supplementary Medicare plans to get people living in the Medicare system the coverage they need for their specific cases. By shopping around for the best price and plans on their behalf, we keep their costs as low as possible, while allowing them to keep the benefits that Medicare currently offers them. With Medicare plans ranging from minor supplementation to fully augmenting, or even superseding, certain coverage aspects, there really is a robust post-retirement plan available for anyone under the current system. The only question is “what will these plans look like in 5-10 years?” and that’s a question for another time.