Now Medicare Out-of-Pocket Expense Is Important to The Incidental Economist

The Incidental Economist (TIE) in the week of September 10 wrote in Washington Monthly more of his nonsense about Medicare, following up recent pontificating on CNN, in which he -- writing just the opposite of what he said in the Washington Monthly post -- trivialized Medicare beneficiary out-of-pocket (OOP) expense.

In the first sentence of the Washington Monthly article, TIE claims everyone likes

"to think that Medicare is an incredibly comprehensive health care insurance program that protects seniors from financial hardship due to health related issues."

It is only Democratic-party activists and naive fellow travelers in academia who like to think that. No one on Medicare would ever think that statement to be true. This TIE blog post is total navel gazing by someone who doesn't understand Medicare.

 

 (Of course, I wouldn't expect TIE to understand Medicare and senior issues. According to his bio, he's a doctor; he's a pediatrician, and he's a government employee. That means -- in order -- he doesn't understand insurance, he doesn't know anything about seniors, and he probably won't ever have to deal with Medicare directly because he will receive government retiree insurance.)

Medicare's OOP issue has only a little to do with end of life despite TIE's new concern for us Medicare users.  For a relatively healthy 67-year-old, Medicare Parts A and B ("Medicare as we know it" as Democrats like TIE call it) is terrible insurance. Medicare Parts A and B lack catastrophic coverage, the most important thing insurance should have.  And not only does Medicare Parts A and B lack catastrophic coverage, at the other end of the protection scale "Medicare as we know it" has very high co-pays, co-insurance and deductibles so what TIE calls "incredibly comprehensive health care insurance program" unbelievably combines the two characteristics that define the worst insurance ever designed:

• lifetime limits
• high out of pocket costs

Again, I am not talking end-of-life OOP costs. A relatively healthy 67-year-old pays for his or her healthcare five different ways and only one of them (number 3 below) involves "Medicare as we know it" directly.

 

1. He or she pays for Medicare Part A through 45 years of payroll taxes (if retiring now)
2. He or she initially pays for Medicare Part B through 45 years of income taxes
3. He or she continues to pay a Medicare Part B premium of $100 a month (2012 rate; higher if high income; waived if making less than about 150% of FPL in retirement)
4. Over 80% of Medicare beneficiaries "choose" to pay $100-$400 more per month on average for additional private supplemental insurance from Medicare itself (Parts C and D), former employers, or as individuals to make up for some of the deficiencies in Medicare Parts A and B noted above (varies by county and by benefits provided by the supplemental insurance)
5. He or she still pays large amounts out of pocket not only for Medicare Part A and B co-pays, co-insurance and deductibles (depending on the terms of the supplemental insurance) but for things that none of the above usually covers such as dental and aural expenses, long-term care, and healthcare coverage outside the United States

We need Medicare Reform now but you won't hear that from the TIE. According to his CNN blog post, TIE believes that the current Medicare law is just fine.

-- Dennis Byron