When Americans turn 65, they must enroll in Medicare whether they want to or not. The only exception is if you are still working and have health coverage from an employer. Otherwise, you have to enroll in Medicare; there is no other reasonable choice.
Sound familiar? The Affordable Care Act — "Obamacare" — likewise gives Americans no choice, extending the coverage mandate to everyone, the young included. And like Medicare enrollees, many of those forced to sign up for health insurance by the end of the year will discover their government-mandated coverage saddles them with significant out-of-pocket costs.
A common assumption is that Medicare covers most medical costs for the elderly. But that’s not quite the case. Most seniors don’t realize that in addition to Medicare, they need to have either supplemental insurance or a lot of money in the bank. That’s because Medicare only covers about 60 percent of health care costs for the elderly, and it doesn’t cover large portions of what elderly people need most: nursing home care and hospital stays.
Medicare covers no more than 100 days in a nursing home, and only the first 20 days are covered in full. The remaining 80 days require a co-payment of $148 per day. For hospital stays, Medicare generally covers only 90 days, 60 of which are paid in full (after an initial co-pay of $1,184) while the remaining days require a co-payment of $296 per day.
Some of these costs can be covered by supplemental private insurance. However, private insurance is not available until you pay for Medicare parts B, C, and sometimes D — the optional Medicare plans that cover things like physician visits, lab tests and prescription drugs.
All of those plans require seniors to contribute to premiums and co-payments, depending on income. For seniors who are still working, those costs can be significant—and they are rising. In November, the highest premium category in Medicare increased 142 percent. That increase can amount to as much as $9,655 per year for a still-working couple trying to save for retirement — plus deductibles, co-pays, the Obamacare Medicare tax, and supplemental insurance premiums.
Faced with steep out-of-pocket costs, many working seniors might simply conclude Medicare isn’t worth it and opt out of the program. But that’s not an option. Earlier this year, the U.S. Supreme Court refused to hear the case of five seniors who were told by federal officials that they had to forfeit all of their Social Security benefits if they withdrew from or declined to enroll in Medicare.
By deciding not to hear the case, the Supreme Court let stand a decision by lower courts that affirmed the government’s right to deny seniors their Social Security benefits if they do not enroll in Medicare, and also to confiscate past Social Security payments if they drop out of the program.
In other words, the government has the legal authority to mandate participation in a bloated entitlement program that forces enrollees to pay potentially large sums in out-of-pocket costs.
Soon, uninsured young people will be made painfully aware of this authority, as they are forced by Obamacare to enter a new entitlement program in which they must purchase health insurance plans they might not want or need.
Faulty assumptions abound here, too. We’ve been told that federal subsidies will offset the cost of coverage, but that’s not true for everybody. If you’re too young and you earn too much, you don’t get a subsidy.
For example, a 27-year-old in Austin who earns $30,000 a year will not qualify for a subsidy. He or she will have to pay the entire cost of the premium out of pocket. According to data released last week by the federal government, the cheapest plan available to this young person in Austin will cost $109 a month—a significant monthly bill for someone with that income.
For now, this person has a choice: pay the penalty or pay for coverage. In the face of costly premiums, many young people will choose their fiscal health over their physical health — and they would not be reckless for doing so.
But as Obamacare wears on and the penalties increase, young people might eventually find themselves in the position of American seniors today: trapped in a failing entitlement program, with no good choices left.
Wohlgemuth is executive director and director for the Center for Health Care Policy with the Texas Public Policy Foundation.firstname.lastname@example.org