Traditional Medicare doesn't begin paying from the first dollar spent on doctor/hospital bills each year. There's a deductible for doctor's visits ($162/year) and hospital stays ($1132/admission). After the deductibles, Medicare pays 80% of covered charges, with the patient responsible for the other 20%. If your hospital stay is more than 60 days, the patient may be responsible for hundreds of dollars per day in additional expenses.
That's why people purchase "medigap" coverage from private insurance companies. The most popular policy covers the Medicare deductibles and the 20% that Medicare does not pay. It seems that a possible outcome of the debt-ceiling talks may include changes to these policies.
"One proposal would bar supplemental insurance from completely eliminating out-of-pocket costs — or charge enrollees a $530-a-year extra if they want to keep such protection. That change could save up to $53 billion over 10 years, according to a chart used during the bipartisan talks led by Vice President Joe Biden."
The thinking behind this is that Medicare users "overuse" Medicare-covered services unless they "have some skin in the game." In other words, they should bear some of the costs.
OK, let's get real here. People don't get a hip replacement because they don't have an out-of-pocket cost and they don't have anything exciting on their social calendar for a month of so. They do it because their current hip hurts like hell.
Let's talk about that "skin in the game." A little arithmetic goes a long way here. Every Traditional Medicare participant pays $96.40/month for Medicare part B (doctor) coverage. Part A coverage (hospital) is free. For a retired couple that's $192.80/month or $2313.60/year.
If each spouse purchases the medigap policy covering the Medicare deductibles and the 20% not paid by Medicare, that $355/month or $4260/year.
Let's not forget about drugs. An average Medicare part D drug policy might run $100/month or $1200/year for the retired couple.
Let's see...we're up to $647.80/month or $7773.60/year. Did we miss anything?
Don't forget that there are co-pays with the part D drug coverages. Let's say they amount to $50/month or $600/year for the couple. Bringing our totals to $697.80/month or $8373.60/year.
I's say that this couple has a LOT of "skin in the game." Medicare is most certainly NOT "free medical care for the elderly."
Oh, and we're not done yet. Medicare does not cover glasses or dental care. Toss in a pair of glasses or a root canal and a crown and our retired couple might reasonably have $10,000 in healthcare costs per year. These costs are sure as hell "out-of-pocket."
If our hypothetical retired couple is living on Social Security payments of $2500/month ($30,000/year), they're spending 1/3 of their total income on healthcare expenses.
Remember, there are no poor people in Congress. If you're a member of Congress and are "merely" a millionaire, you live in the poor section of town. Most members of Congress are much better off. In their world, that $10,000/year may not be "skin," but to our retired couple, it's probably skin plus some other organs as well!
The article concludes with this question and answer:
"Q: What are the chances that these ideas will be adopted by lawmakers?
A: Because making any change that could be seen as a cut in Medicare benefits carries huge political risk, previous calls for changing the traditional Medicare program or limiting first-dollar coverage through supplemental insurance have not picked up support. But now, when failure to lift the debt ceiling could result in widespread economic problems, a middle-of-the night compromise between warring factions in Congress could put it back on the table.
"Normally, this would be dead on arrival. But this is such a dicey environment that these guys are going to cut some kind of deal at midnight either before or after August 2nd in such a hurry that they won't be worried about the kinds of things people normally worry about when they cut senior benefits," says Robert Laszewski, an Alexandria, Va.-based consultant to the health care industry."
You might want to drop an email--no time for snail-mail--to your folks in Congress and the president, and let them know your views.
Read more: http://www.mcclatchydc.com/2011/07/15/117709/debt-talks-what-could-happen-to.html#ixzz1SI07Ev6R
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