Stanley Feld M.D.,FACP,MACE
Many people believe Medicare works well. Many people have said all we need to do to repair the healthcare system is lower the eligibility age from 65 to newborns.
America would then achieve a. universal care, b. affordable costs c. improved quality care. The healthcare system would be fixed. The statement is simplistic but popular.
Medicare coverage does work well for seniors if they have both adequate supplemental coverage and Medicare Part D to cover the Medicare gaps in coverage and drugs.
Medicare Part D( drug coverage) was poorly constructed. It was built to the advantage of the healthcare insurance industry not seniors. If seniors do not have supplemental Medicare insurance (Medigap) they could be bankrupted because of the Medicare deductibles and co-pays. .
Medicare does protect the senior from the retail price of medical care. It does guarantee insurability at a price not determined by pre-existing illness. It does permit choice of provider providing the provider sees Medicare patients.
Fewer and fewer physicians are accepting Medicare patients. Medicare reimbursement and coverage decline with each passing year. In many cases physician reimbursement is lower than the physician’s cost to provide the service.
This has been a constant battle for physicians since the government cost savings program was mandated in the 1980’s. Another 20% reduction in reimbursement is scheduled for 2010.
Seniors can still go to physicians who do not accept Medicare. However, seniors will be responsible to pay the retail price for the service. Seniors will collect directly from Medicare 80% of Medicare’s acceptable fee after they submit the bill to Medicare.
For example, if a medical bill is $200 and Medicare’s allowable fee is $80, Medicare will pay you 80% of the allowable fee or $64. The senior has already paid the physician $200. The senior’s out of pocket expense is $135 . If the physician honors Medicare $120 of his $200 fee is disallowed.
Medicare will pay the physician $64. The senior is liable for $16. If the senior has supplemental insurance (Medigap) the supplemental insurance will pay the remaining $16. .
The Medicare premium paid by seniors monthly is not cheap. The base assessment is $99 per month per senior. This assessment might not be affordable to many who are on a fixed income.
The Medicare Part D helped pay for prescription drugs. Many seniors cannot afford to buy the medication they need. Medication needed to stay well and out of the hospital.
1. Medicare has recently imposed an added assessment to the basic Medicare premium. It is called the Modified Adjusted Income Calculation. The IRS supplies Medicare with a senior’s previous year income tax returns. Capital gains, dividends, tax free dividends, and salaries are including in the Modified Adjusted Income calculation.
2. A married couple with a joint return and income from all sources is going to have an additional assessment of between $51.60 and $284 dollars per person per month depending on their combined Modified Adjusted Income calculation assessment.
3. The assessment starts at $160,000/yr and ends at $410,000 per year. A widow with dividends, capital gains, an annuity and rental income of $164,000 per year is assessed an additional $103.30 per month or $1239.60 per year.
4. This assessment is paid with pre tax dollars. It gets deducted from the Social Security payment. If a person has earned income in addition to passive income the person is also paying additional tax on his Social Security check.
5. The deductible of 20% of the allowable fee and the initial $992.00 deductible for a hospital admission becomes expensive quickly.
6. In order for the Medicare recipient to have full coverage for the deductibles they have to buy Medigap insurance. There are seven Medigap insurance policies. The best and most complete is the Medigap Part F. Several private healthcare insurance companies sell this coverage. For persons under 70 years the cost of the policy is $140 dollars per person per month in after tax dollars. The effective post tax cost per month is $200 per person or $400 per couple. The yearly after tax dollar cost is $4800 per year.
7. If you add Medicare Part D for prescription drug coverage, it adds another $24 per person or $34.28 dollars in after tax dollars per month per person or $822 dollars per couple per year. This cost does not consider the extra cost of the infamous doughnut hole.
8. The total premium for adequate Medicare insurance is $2244 plus $4800 plus $822 or $7866 per year. This calculation excludes the modified adjusted gross income. The modified adjusted income can add $619.20 to $3408 per couple per year to the premium. The MAGI creates a means adjusted premium. The maximum means adjusted premium is $11,274. per year per couple in 2008.
It should be clear that Medicare has its benefits. However it also has limitations because despite these premiums and deductibles the government’s unfunded liabilities for Medicare is escalating to unsustainable levels.