In my previous post Teresa Ghilarducci, a retirement expert at The New School for Social Research in New York City, warned of poverty in old age and discussed' the specter of downward mobility looming ahead for many middle and even high-income workers.' Paying more for health care will play a role in depleting pocketbooks and not only for those at the lower levels of the income ladder.
I was reminded of a conversation I had a few years back with Marilyn Moon, a Medicare expert and a vice president at the American Institutes for Research.' The best advice she gave for people not yet on Medicare was to save, save, save because even with Medicare, seniors would be paying more for their coverage and for their health care.' Moon was right.
Changes Congress has already made to Medicare as well as proposals floating around today will make Medicare more expensive for seniors. Some are already paying higher premiums for their basic benefits because of provisions in the Medicare prescription drug law passed almost ten years ago.
The Medicare prescription drug law (which created Part D) passed in 2003 also mandated that people with higher incomes---$85,000 for individuals and $170,000 for couples--- pay higher premiums for their Part B benefits.' Part B pays for doctor visits and outpatient hospital care. A little-advertised provision in the Affordable Care Act went further calling for seniors with higher incomes' to pay more for their Part D premiums as well.
Proposals floating around Congress would lower those income thresholds, with the result that seniors with lower incomes would pay more too.' The Kaiser Family Foundation noted that under some of these proposals "a growing share of the elderly and disabled people who would not be considered high income by today's standards would face higher premiums and as the income-related premium amounts increase over time, they would consumer a larger share of income."
Another not widely publicized provision in the Affordable Care Act changes what Medigap insurers will be allowed to cover for seniors who have the Plan F and Plan C Medigap policies.' These are the most popular Medigap plans because they cover almost everything, and a lot of seniors are pretty risk averse.' Seniors are understandably afraid of big bills at the end of a costly medical procedure.
Come 2015, seniors will also be surprised to find their Medigap policy may not pick-up the entire 20 percent of the co-insurance Medicare requires them to pay or they may find co-insurance applies to services that formerly did not have them. ' The reasoning behind this shift is that if seniors have to shoulder more of the costs of their care, ' they will use fewer services and the nation's health care bill will drop.' In other words, these are all cost containment strategies carried out on the' backs of the elderly.
What will seniors do?' Dig into their savings, of course, to pay the rest.
Will these changes widen the gateway to poverty?