Health care reform is a political hot potato. Gallup notes top issues for voters are healthcare, economy, immigration. Politically crafted ideas are all over the map. Most likely you will enter the 2020 voting booth still confused as to how a particular proposal will impact your bottom line as a breadwinner, parent, caregiver, employer, employee, retiree or investor.
Recall that the Patient Protection and Affordable Care Act of 2010 (Obamacare) was supposed to meet healthcare challenges. While it solved some problems, the word “affordable” seems like cruel irony. So here we go again with budget-busting proposals for Medicare for All (M4A) and Medicare at age 50 buy-in. What questions should we ask?
Bernie Sanders recently published his Green New Deal manifesto, which should have anyone concerned with our growing national debt seeing red. Price tag, $16.3 trillion, and that doesn’t include his Medicare for All initiative. (Putting Bernie’s stratospheric price tag in context, The Wall Street Journal, 8/26/19, noted that America’s total annual economic output is $21 trillion). Money to fund M4A has to come from somewhere. Question 1 is, “where?”
On the surface M4A seems ideal. A single payer government plan to cover citizens and non-citizens alike with medical, dental, maternity care, long term care, etc.; no co-pays or deductibles. Private insurance for anything covered by government (“taxpayers”) would be illegal. Taxes would rise but you wouldn’t be paying insurance premiums or other costs, says Sanders. Q.2 and 3: How high will taxes go and how will that be apportioned by tax bracket or other payment scheme? Retirees paid FICA taxes their entire working life to fund Medicare. Will there be a “tax-offset” benefit for those who paid in while a flood of newcomers get in for free?
What’s the potential impact on hospitals? For a recent knee replacement a major Atlanta area hospital charged $52,118. Medicare paid $8,821.24 on the claim, noting the patient could be billed for a maximum of $1,381.31 out-of-pocket. Assuming the patient had a supplemental insurance plan that paid the balance, the hospital received roughly 20 percent of the amount billed. Major hospital systems are losing money, and worries about rural hospitals and care centers closing are growing. Low reimbursement rates for Medicaid and Medicare patients are a problem. Some revenue is made up for by charging uninsured persons and insurance companies more, the latter expense really borne by the policyholder and/or those that pay ever rising premiums, including independent business owners and other employers. Can you imagine being uninsured and getting billed for over $52,000?
The NY Times, 7/21/19, noted, “Hospitals Stand to Lose Billions Under Medicare for All.” Q.4: Will your preferred hospital and trauma center be there when you or loved ones need care?
Q. 5: What is the potential impact on you as a patient? In countries where M4A type plans are in place, “wait times” remain a nettlesome problem. A 2018 Fraser Institute study in Canada reported a median wait time to see a specialist after a referral from a GP as almost 20 weeks, with another median delay of 11 weeks before treatment is received.
Talk to doctors. Many can’t wait to retire. Many say they would not urge their kids to go into medicine. Where will the doctors of tomorrow come from? How would bureaucratic delays impact you or loved ones given increased pain and anguish during growing wait times, including increased likelihood of death or poor outcomes? Many doctors currently limit Medicare patients and even more will not accept Medicaid patients. Will forcing doctors and other healthcare workers into a federalized system increase or decrease the supply of doctors and other talent? You know the answer to that question!
Q.6: With hospital systems and practitioners losing money due to low reimbursement rates, if you are a doctor, nurse, or other hospital worker, what’s the potential impact on your livelihood? What happens to workers both in healthcare directly as well as other professions involved in private healthcare related activities such as the insurance industry? How will dislocation impact companies, the real estate they occupy, the stocks you own directly or indirectly? Dislocation of any kind, potential or actual, worries Mr. Market with negative effect. You don’t want your 401(k) to get sick just before retirement, or after, for that matter.
On March 9, 2010, the Affordable Care Act was up for a vote. House Speaker Nancy Pelosi famously declared, “We have to pass the bill so that you can find out what is in it.” This time around we had best ask more and better questions, well in advance!
Lewis Walker, CFP®, is a financial life planning strategist at Capital Insight Group; 770-441-3553;firstname.lastname@example.org. Securities & advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis is a registered representative and investment adviser representative of SFA, otherwise unaffiliated with Capital Insight Group. He’s a Gallup Certified Clifton Strengths Coach and Certified Exit Planning Advisor.