The biggest risk to your retirement plans are Congress’ changes to Medicare that shift more costs to you

By Doug Dickerson, State Director, AARP North Carolina

Few eyes are on Medicare, the healthcare plan that workers have paid into straight from their paychecks for almost 53 years.  Workers know that if there’s one thing that’s certain, is that healthcare is guaranteed if a person, regardless of their condition, can live to at least age 65.  Now, while the country’s attention is distracted with the President’s political troubles, conservative Congressional leaders are moving towards implementing a plan to drastically change Medicare and limit the federal government’s coverage for older adults.

These changes would cap the federal government’s spending, despite the long-held guarantee that workers had with the government:  pay your taxes over your working career and Medicare will pay healthcare coverage when you’re older.  Yet, that guarantee may be ending if key Congressional leaders have their way, A Better Way, that is.  The rosy plan, put forward by Speaker Paul Ryan, envisions a privately-managed healthcare insurance plan where the government provides a voucher, or stipend, so people can buy their own health insurance.  Choice sounds good, right?

However, as we have seen in recent years, these plans have resulted in double-digit cost growth, larger deductibles, annual and lifetime caps, and reduced coverage for prescription medicines.  Government accountants might like it, but workers not yet eligible for today’s Medicare probably won’t.

Few people have health conditions that remain steady over a lifetime, often encountering life’s challenges to health as we age, increasingly for those over 65.  The guaranteed level of coverage that Medicare currently provides — e.g., covering hospital care and 80 percent of the total cost of doctor visits — and replace it with “vouchers” with which seniors would be directed to buy their own health insurance from the private sector.

The problem with “vouchers” from a consumer’s perspective is less healthcare coverage from Medicare, or higher out-of-pocket expenses as the federal government shifts more cost responsibility to individuals.

The concept of “vouchers” – which proponents cloak in a technical term called “premium support” or in political spin of “patient choice” and “Medicare modernization”—is being circulated in Congress now as part of the tax reform discussions.  Because it would have a budget impact that reduces federal spending, it can be accomplished through the budget reconciliation process, which means it needs only 51 votes in the Senate to pass.

These same congressional leaders are claiming there’s a Medicare crisis to fix – that it’s “going broke” and they need to act fast.  Actually, that was the case in 2009 when Medicare was forecast to be out of funds for hospital visits by 2016, only to be saved by the Affordable Care Act’s mechanisms that have now extended Medicare’s funding until 2028, then 79 percent funded until 2040.  If the GOP succeeds in passing the American Health Care Act this spring, Medicare’s hospital fund will lose another 4 years of life, thereby creating the “medicare crisis” that GOP leaders have said looms closely.

Health care is critically important to every American, and Congress’ leaders increasingly want you to pay more out of your own pocket for it, making health care the single biggest risk in retirement as they work to claw back the guarantee of Medicare that we’ve had for half a century.