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Lions and tigers and health care, oh my!

By Van Mueller

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President Obama has stated that health care is a ticking time bomb. Without major reform, healthcare is capable of destroying the world’s economy.

What does this mean for our seniors? Medicare will change dramatically over the next decade. Premiums will increase, and taxes to support Medicare will significantly increase. At the same time, benefits will significantly decrease.

While this is clearly not an ideal scenario, people over age 65 will still have access to quality healthcare. With advance planning, they will be able to set aside the necessary funds to pay those higher premiums.

Health care to be rationed?
I want to raise two issues here, one for seniors and one for agents. At some point, “rationing” will be recommended to preserve Medicare’s solvency. That means the government will have to decide who deserves what care and how much can be given. What age will be too old to have your hip replaced?

Obviously, having money creates more options, and I believe medical tourism will be a viable alternative for well-prepared seniors who face rationing.

Now, my fellow agents, remember that when Medicare benefits decrease, Medicare supplement premiums and Medicare Advantage plan deductibles will rise dramatically. When that happens, our customers’ instinctive reaction will be anger toward insurance companies for increasing premiums–when they should be upset with government for reducing benefits. You must be ready to explain what is actually happening. Insurance is not the problem, it is the solution to the problem.

Bigger challenges for the young
People under age 65 face a more daunting challenge. The cost of personal family health insurance currently averages $12,600 annually. Premiums increased by 9 percent this year alone. The annual premium for the same family plan is predicted to be $25,000 by 2017.

Americans cannot afford this. Any potential income increases (not so much a certainty anymore) will certainly not match premium increases in the next decade. Something has got to give.

Can we expect reforms? Will the changes be dramatic, likely painful and in some cases unforeseeable? The answer to all these questions is yes.

Fortunately, we do not have to wait for that happen. Our seniors have saved more money than any other generation. If we show them how to leverage that money with life insurance and hybrid long term care/life insurance programs, we can provide the money for families to weather this challenging transition.