What’s a “Fair Share” for Medicare Beneficiaries?

There’s a very illuminating story in the newest edition of National Journal (no, I can’t link to the article because it’s subscription-only material, but I urge you to check out the Meghan McCarthy article “A Fair Share” on page 38) regarding the actual out-of-pocket healthcare costs for Medicare beneficiaries.

The President’s proposed budget, released this past Monday, calls for over $32 billion in new beneficiary costs over the next decade assessed in the form of higher co-pays, deductibles and premiums for higher-income seniors.  (More on the President’s proposed Medicare provisions here.) As President Obama said last fall, he is asking “the wealthiest Americans…to pay their fair share.”

What Ms. McCarthy points out in her article is that seniors, without even accounting for any Obama-proposed increases, are already paying plenty for Medicare coverage.  As she writes:

  • Americans under 65 spend, according to the Kaiser Family Foundation, about three percent of their income on healthcare. Medicare beneficiaries spend 16 percent, and that figure is expected to reach 26 percent by 2020.
  • Under the Affordable Care Act, private sector employees who pay more than 9.5 percent of their income for health insurance will qualify for coverage in a state exchange and possibly be eligible for premium subsidies.  According to Kaiser, seniors were spending an average eight percent of their incomes on Medicare premiums in 2006 and had no access to competitive insurance exchanges or subsidies.
  • The White House wants 25 percent of beneficiaries, or 19 million people, to pay higher Medicare premiums or “more of their fair share.”  Kaiser, according to Ms. McCarthy, has estimated that this 25 percent threshold will affect people not typically considered wealthy.

The National Journal article gets right to the heart of the dilemma.  Under Medicare’s current structure, there are limited options to achieve financial solvency.  Ms. McCarthy wrote, “And without an alternative to Medicare’s fee-for-service system, the government is limited to cutting provider payments – which the president’s budget also does, or asking seniors to cough up extra cash.”

And that raises the question, should there be other options?  More to the point, shouldn’t Medicare beneficiaries, who are paying plenty for their healthcare, have the same option under-65 consumers will soon enjoy to shop in a competitive exchange for the health plan that offers the best value for their particular health needs and status?