Unraveling the Medicare knot: Column addresses concerns about program

By Trudy Lieberman

Over the past few months, these columns have raised plenty of questions about Medicare, present and future, and I’ve received many responses to those questions from readers. Today’s column addresses some of readers’ concerns about Medicare, a complicated program.

Q: Why do you refer to Social Security as social insurance? This continues to baffle me just as those who continually refer to SS as a handout. It’s not a handout. That money has been taken out of every one of my paychecks since I was 16. This is my money. — TF

A: Social insurance is group insurance. Workers pay premiums in exchange for insurance against the loss of wages as the result of disability death, or old age. Because the government manages the insurance, and it is nearly universal, it has historically been labeled social insurance. The writer is correct. Working and paying those insurance contributions entitles him to benefits. The benefits are not a government handout. Social Security is not a welfare program.

Q: I turn 65 this August and need to learn the basics to make informed choices. Is there a website or source you recommend that would give me the basics of Medicare? — PH

A: You can start with your local SHIP program, the government funded State Health Insurance Assistance Program https://www.shiptacenter.org/, which provides one-on-on counseling and answers questions. Medicare Interactive medicareinteractive.org, a website sponsored by the Medicare Rights Center, also is helpful as is Medicare’s official website, Medicare.gov.

Q: Both Social Security and Medicare are run under FICA, the Federal Insurance Contributions Act, and are not part of the national debt. The government needs to raise premiums for people earning higher incomes. — MR

A: Social Security and Medicare’s hospital benefits are funded primarily through mandatory premiums known as insurance contributions. Neither Social Security nor Medicare hospital insurance adds a penny to the nation’s deficit and debt. One solution for potential Social Security shortfalls is to eliminate the cap on earnings on which Social Security contributions are assessed. For this year the cap is $127,200. Congress eliminated the cap for Medicare contributions in the early 1990s.

Q: The government has to stop using Medicare funds to pay hospital bills for illegal aliens. They are not covered under Medicare, and the millions and billions of dollars should not be taken from Medicare funds. — BC

A: Medicare does not pay for healthcare for undocumented people. Community clinics may offer services. Hospitals may treat them under their charity and uncompensated care programs, but usually try to collect those debts.

Q: I am very happy there’s going to be Medicaid reform. I am a dental hygienist who worked in a practice that has seen has many Medicaid patients. Many of these people were illegal. Some couldn’t even speak English. I am on the door of seniorhood but love the idea of Medicaid reform. We can save millions, probably billions, by putting people to work who can work. — CW

A: The column you refer to discussed Medicare, not Medicaid. The programs are not the same. Medicaid was not designed as a seniors’ program, but 20 percent of Medicaid expenditures are for long-term care. The lack of such care for families has meant that Medicaid, a welfare program, has become a long-term care program by default for many middle-income seniors. Congress is considering cuts to both programs that could result in seniors paying a lot more out of pocket.

Q: My husband and I are hoping this administration doesn’t ruin this program by making it private. It has worked very well for a long time and should be left alone. If this program is made too expensive for seniors, the doctors will be seeing far fewer patients. — BC

A: It is well known that seniors are risk-averse, meaning they are afraid of big medical bills they can’t afford. That explains the popularity of Medigap policies, especially the ones that cover the portion of a doctor’s bill that Medicare doesn’t pay, in effect giving seniors nearly full coverage. Many in Congress want to change that. Beginning in 2020, insurers will be prohibited from selling those kinds of Medigap policies to people new to the program. (Those who already have such a policy can keep it.) The idea is to make seniors have more skin in the game by paying more for their care as a way to save money for the government.

Trudy Lieberman, a journalist for more than 40 years, is a contributing editor to the Columbia Journalism Review, where she blogs about health care and retirement at cjr.org. She can be reached at [email protected].