If you think seniors can afford to pay more for Medicare, let’s take another look at that thought.
Why is this important? House Republicans have been calling for an end to traditional Medicare, instead favoring a voucher program where seniors pay for private plans. The latest proposal would give seniors a choice of using a government subsidy to either buy private insurance or pay for Medicare premiums in 2024.
Many believe a subsidy program would shift more health care costs to seniors over time. Also, if new retirees picked private insurance, traditional Medicare would become much more expensive for those who continued to use it because they’d likely be older and in poorer health.
“The Congressional Budget Office has estimated that this effect could boost traditional Medicare premiums 50 percent by 2020 compared with current projections,” Reuters said.
Seniors covered by Medicare are already paying for a chunk of their health care costs. According to the Employee Benefit Research Institute, Medicare covered about 62 percent of health care costs for seniors in 2010. Private insurance covered 13 percent and seniors paid 12 percent of costs.
Out-of-pocket health care costs totaled about $4,760 in 2011 for a 65-year-old in poor health and $4,450 for a 65-year-old in good health, according to U.S. News & World Report. By age 75, those numbers increased to $5,635 for someone in poor health and $5,220 for a senior in good health.
HealthView Services, which develops software for gauging health care costs, recently estimated that a senior retiring this year in high-cost Massachusetts would pay $7,020 in Medicare premiums alone – a number that will jump to $11,536 in 2024. And that figure doesn’t include co-pays and out-of-pocket costs for things Medicare doesn’t cover, such as dental care. It also doesn’t include costs for a catastrophic event.
So, can seniors afford to pay more? Check out a new interactive Medicare recipient income and assets tool from the Kaiser Family Foundation to find your answer. Reuters did. Among the results:
- Fifty-three percent of Medicare recipients had $25,000 or less in annual income in 2013. Just 4 percent had income of more than $100,000. And nearly 27 percent had income below $15,000.
- Half of seniors had savings accounts with less than $61,400 and home equity below $67,700 on a per-person basis.
- “Median 2013 per capita income for white Medicare beneficiaries was $26,400, compared with $16,350 for African Americans and $13,000 for Hispanics,” Reuters said. While men’s median income was $25,880, women’s income was $21,800.
Kaiser told Reuters that just 5 percent of Medicare recipients will have income of more than $111,900 in 2030, while half will have less than $28,250 to live on.
“There will always be a small share of the Medicare population with sufficient wealth and resources to absorb higher costs, but most will not be in that position,” [KFF executive Tricia Neuman] says. “The assumption that boomers are healthier and wealthier and that we’ll have a much rosier Medicare outlook down the road just isn’t going to happen.”
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