Keep an eye on Medicare

Some employers have eliminated their retired employee health benefits in favor of private health insurance exchanges. The idea is sold to retirees as a better deal with more choices. What they don’t make clear is that they have also changed the employer contribution from a defined benefit to a defined contribution. That simply means that the employer   contribution toward the premium will no longer rise automatically with the increased premiums each year. 

The new defined employer contribution may initially be set at the current level, say 80% of the total premium. However, thereafter the employer contribution is detached from premium increases. The employer independently determines how much, if any, the contribution will increase. The result is that over time the employer contribution will decrease from say 80% of premium to 50-60% with the retiree picking up the difference. This is how the employer saves money. 

Enter Medicare. The Ryan plan calls for the use of vouchers given to each beneficiary to buy private coverage. Think of the voucher as the employer defined contribution except the government determines when and how much the voucher amount increases. 

You can figure out where this is going. 


5 replies »

  1. And your alternative is? Who should pay for Medicare Part B and D if not the beneficiaries – particularly Part D which just started in 2006 and was not funded with anything other than general revenue (income taxes). Who is to pay? The French? Perhaps you want caps on provider reimbursements (aka negotiate) – so we get to Medicaid levels where most providers have now rejected those with Medicaid. Taxpayers, or “high income” taxpayers? Perhaps you want to take a page from Iceland – a wealth tax? Part B and Part D (and actually Part A) all have long deployed income based premiums that near no relation to the benefi provided?

    So, your alternative? If not the beneficiaries themselves, who should shoulder the inflation burden of those covered on Medicare?


  2. What is driving Lyan Ryan to pursue this for 8 or 10 years? Just his inane ideology that Medicare recipients are despicable “takers” in his warped mind? My mother worked as long as she could (35 years in elementary education). Her husband died at age 47. My mother is now 100+ years of age thanks to Medicare and Social Security, she still has her own home and remains nearly self-sufficient. Why does Paul Ryan and the GOP (Greed Over People) want to deprive people like her of their much needed healthcare? It’s beyond my comprehension? It’s evil!


    • Medicare is going broke via Part A, Part B absorbs a major portion of the federal budget with no limits on the spending. Something needs to be done to keep this going. Raise the payroll tax, raise the premiums or change the benefits or structure or some combination of all, but something unless we feel there is no limit on any spending.


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