The media thrives on political conflict and loves to pit one group of Americans against another. That is why we so often hear media reports about how the Medicare program is going broke or that Medicare is an entitlement program that is running up our national debt to unsustainable levels. This then permits the media to promote the ongoing fight between liberals and conservatives as to what to do about the problem. What we do not hear much about is when our policy makers actually find bipartisan agreement and pass a law that affects millions of people. For example, in 2015 the Medicare Access and CHIP Reauthorization Act which is also known as “The doc fix”, in part, banned certain Medicare supplement plans. Under that law starting in year 2020, insurance companies are no longer allowed to offer any Medicare supplement plan that covers what is considered to be first dollar benefits such as paying the Medicare Part B deductible for a Medicare beneficiary. The reasoning for this law is to save the government money and, hopefully, Medicare. According to the policy makers, the specific intent is to make Medicare beneficiaries more sensitive to the cost of medical care so that they will be less inclined to use medical services in the first place. In other words, if a consumer has to pay more out of pocket for a medical service, they might decide to forgo minor treatment altogether. According to estimates by the Congressional Budget Office (CBO), the law will save $400 million from Medicare spending between years 2020 and 2025.

While policy makers found a way to save some $400 million from Medicare beginning in 2020, there will undoubtedly be even more pressure on policymakers to reduce spending in 2021 and beyond. A September 3, 2020 article written by Juliette Cubanski and Tricia Neuman of the Kaiser Family Foundation gives some reasons for this concern. The article is entitled “Medicare finances have gotten much worse in recent years, foreshadowing tough choices for November’s winners.” The authors explain in the article that the latest Medicare projections from the CBO show that Medicare’s Hospital Insurance Trust Fund will have insufficient funds to cover all benefit costs beginning in year 2024 which is two years sooner than last year’s projection. One of the reasons for this is the COVID-19 pandemic. During the COVID-19 pandemic, there has been a reduction in payroll tax revenue due to the economic downturn caused by the pandemic. This presents a problem for Medicare because Medicare is funded in large part through payroll taxes. So what can we expect next from our policymakers? Higher payroll tax rates? Fewer Medicare benefits? Will the left or the right be the villain or will a bipartisan law be passed quietly. However our policymakers choose to respond, it will most likely be painful for consumers in general and Medicare beneficiaries in particular.

The good news is that there are still several types of Medicare supplement plans and numerous Medicare Advantage plans available to help you, the consumer, save money and reduce out of pocket risk.

For a detailed overview of how Medicare plans work, read our blog on Medicare Enhancement Options.