January 22, 2017 — The AARP is a solid defender of Medicare and Social Security, as you might imagine. In their most recent Special Report the organization highlights some of the issues and dangers that Medicare faces as the Trump administration and Republican controlled Congress take over. We recommend reading the entire AARP Special Medicare Report – it raises important issues that every retiree, and every American, needs to be informed on. We certainly know the issue resonates with Topretirements members, who from our surveys say they like Medicare.
Conflict between the new President and conservative Republicans – and surprising potential allies
Trump promised on the campaign trail in New Hampshire that he would protect Medicare: “Every Republican wants to do a big number on Social Security. They want to do it on Medicare. They want to do it on Medicaid. And we can’t do that. It’s not fair to the people who have been paying in for years.”
With the inauguration behind us the battle lines are a bit murkier. Speaker of the House Ryan has proposed that Medicare as we know it would be replaced by fixed payments with which beneficiaries would be able to buy private insurance. His plan would also delay coverage from age 65 to age 67. The effect would be to change the popular program used by 57 million people from a “defined benefit” to a “defined contribution” program. Trump’s pick to head the Department of Health and Human Services, Tom Price (R-Ga.), is seen as an advocate of Ryan’s Medicare approach, which critics label as a “voucher system” (supporters call it “premium support”).
If Trump sticks with his campaign promises, that would make him at odds with the Ryan plan. Holding on to that position would, oddly enough, align the new President closer to his natural foes, the Democrats. However, Trump’s website is less definite about his plans for Medicare. According to the AARP, the site says he wants to “modernize Medicare,” which many people interpret as supportive of Ryan-type approaches. Meanwhile, over at the reformulated Whitehouse.gov site neither Medicare or Social Security are listed as “Top Issues”, nor could we find any information about either issue there.
The impact of Obamacare repeal
Republicans and President Trump have a clear goal to repeal the Affordable Care Act (ACA) known as Obamacare. The problem is that they haven’t decided how to replace it, and given their divisions, might not actually be able to to that without garnering widespread Democratic support. That puts the future of the ACA’s many provisions affecting Medicare into doubt. If they cannot replace all of the popular Medicare components, such as free prevention services and coverage of the “doughnut hole” for prescription drugs, Medicare beneficiaries could be severely impacted.
Retirees who are not yet eligible for Medicare could be impacted even more severely, depending on what happens with Obamacare replacement.
What to do
The Medicare landscape has the potential to change very fast as the government tries to control its costs and deal with the repeal of Obamacare. We recommend that you stay informed on this issue as well as on Social Security, which faces similar challenges. Whether you like the direction you see or not, it is important that you let your elected representatives know your position in clear terms. All it takes is a phone call or email (your reps all have websites with their contact information) and at least you will have been heard!
To find out more about the fiscal health of Medicare see the annual Trustees Report, which finds among other things that the Medicare Part A trust fund will be exhausted in 2028, at which point only 87% of costs can be paid. So something has to be done – the question is what.