Most Millennials would say that Medicare is the furthest thing from their minds. With the oldest Millennials being only in their late thirties, it would seem they have all the time in the world to figure out Medicare.
However, House and Senate Democrats have put together a bill that would offer an alternative to individual health insurance plans under the Affordable Care Act. The bill proposes allowing people aged 50 – 65 to buy into a private Medicare plans while still receiving the same tax credits and cost-sharing subsidies that they would under the ACA. If such a bill were to be passed, this would put the oldest millennials only 13 years out from access to Medicare.
And with Medicare for All shaping up to be one of the defining topics of the 2020 elections, the reality is that Millennials voters could have a significant impact on Medicare’s near future.
What they may not realize is that they, not baby boomers, are also are likely generation to be most affected by changes made to Medicare.
So, they should care, and care a lot, as you’ll soon see. Here are some of the reasons:
Medicare is a Political Hot Potato
The ever-present problem when it comes to politicians and Medicare is that no power-loving Congressman wants to fall on his sword to save Medicare. Cutting Medicare benefits for current Medicare beneficiaries is akin to political suicide. Today’s seniors have powerful lobbies and sheer voting numbers on their side and proposals that involve cuts to any current benefits are usually not taken kindly.
So, while there have been many proposals to fix the finances of Social Security and Medicare, none of them are painless for everyone. Congress is continually faced with either raising taxes or cutting benefits, neither of which are popular with American voters. Instead of making the hard but necessary choices, they routinely kick the can down the road.
It’s just too tempting to reduce Medicare’s benefits only for future generations that aren’t paying as much attention to what’s going on right now with senior access to healthcare because it doesn’t affect them in the moment.
If legislation is passed that makes cuts to Medicare’s benefits that phase in over the next couple of decades, Millennials may turn 65 one day and find that their hopes and dreams for their golden years are crushed by the burden of expensive healthcare.
Medicare Isn’t Free Even Today
Many Millennials assume that because Medicare is a national health insurance program, it must be free.
As it is today, Medicare is nowhere close to being free. First, most Americans pay taxes during their working years that fund Medicare’s Part A hospital benefits. That means Millennials (and everyone else) are already paying for Medicare Part A benefits right now.
When individuals turn 65 and enroll in Part B outpatient coverage today, they learn that they’ll pay premiums of at least $135.50/month in 2019 and potentially up to four times that much if they are in the highest income bracket. If they want drug coverage, they’ll also need to enroll in and pay for a Part D drug plan. The national average premium for such a plan runs around $35/month.
Just think about what these numbers will look like with ordinary inflation in thirty years.
And that’s not all. You see Medicare only covers about 80% of a beneficiary’s healthcare expenses. The beneficiary pays the other 20% in the form of deductibles, coinsurance and copays as they use their benefits. This means most beneficiaries need a Medicare supplement plan to help them pay for these items.
Lastly, there’s a whole slew of things that Medicare doesn’t cover at all, such as routine dental or vision services. The most important of these is long-term care, which people must pay privately out of their own retirement funds or spend down to qualify for Medicaid.
If this is how much current seniors have to shell out on Medicare and Congress might soon be slashing benefits, what might Millennials have to spend on healthcare in 2047?
It’s no wonder that a study by Fidelity recently found that a couple will need nearly $300,000 dollars for the cost of healthcare in retirement.
Millennials are currently ill-prepared for this, with many of them still paying off student loan debt and trying to find good jobs so they can afford today’s healthcare.
There’s the Tax Bill to Pay for and Parents to Look After
One of the primary reasons that we always hear about the Medicare Trust Fund heading toward insolvency is that politicians keep crafting legislation that calls for cuts to Medicare. Whenever a tax bill reduces taxes for Americans, there must be another place that money comes from. Medicare and Social Security funds are a huge number on paper and so future cuts to Medicare are often part of the solution.
These cuts are likely to affect both Millennials and their parents too. If their parents aren’t adequately prepared for their own healthcare expenses under Medicare, it’s likely that they’ll turn to their children to help them make medical ends meet in retirement. This means Millennials may find that the costs of Medicare will intrude into their lives an entire generation before they themselves reach age 65.
What Can Be Done?
When Medicare was rolled out in the sixties, it was sorely needed. Prior to Medicare people were afraid to retire and lose their employer coverage. People worked well past the normal retirement age simply to keep their healthcare. The advent of Medicare created the concept of retirement that we are all so familiar with now today. It’s one that we cannot lose and must act diligently to preserve.
To save the American Dream, Millennials voters need to care about Medicare today. They need to familiarize themselves with the potential costs for Medicare that they will face in 30 years’ time and begin saving adequately now. Finally, they need to take their new-found knowledge about Medicare with them to the voting booth and begin showing politicians that they mean business when it comes to fixing Medicare before it’s too late.