Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Your Practice

At 55 and 53, Couple Split by Romney Medicare Plan

Your article was successfully shared with the contacts you provided.

CHICAGO (AP) — Mike O’Malley is 55; wife Sharon is 53. So what?

So they’re on opposite sides of the age cutoff in Mitt Romney’s Medicare plan, and that could create a bumpy transition for the suburban Chicago couple and others like them. It would be the difference between being in the traditional program for the elderly and a less certain future.

As the issue rises in importance in the presidential campaign, it’s leading to inevitable comparisons for couples and siblings who are just a few years apart — and sometimes perhaps a touch of envy.

The proposal came from Romney’s running mate, Wisconsin Rep. Paul Ryan. But Romney has largely embraced it, throwing a brighter spotlight on the question of whether and how to revamp the retiree health care program.

Ryan wants to reshape Medicare for future retirees — anyone 54 and younger — while people 55 and older would get Medicare in roughly the same form as it exists today.

Starting in 2023, new retirees on the younger side of the line would get a fixed amount of money from the government to pick either private health insurance or a federal plan modeled on Medicare. Ryan says that will keep the program solvent.

Looking at the O’Malleys can help explain how people of slightly different ages would be affected.

Under Ryan’s plan, Mike would qualify for traditional Medicare in about another decade. Nothing would change for him.

“So I’m covered,” Mike O’Malley says, adding that Ryan’s proposal is “a catalyst for thought.”

But Sharon, in the new program, would have decisions to make. Whichever way she chooses, eventually she might have to pay more for health insurance than Mike, if costs grow faster than the amount the government provides.

“I’m going to be the one who’s not going to have the health care,” Sharon O’Malley said. “It makes you nervous when you pay all this money into the system and it won’t be there when you need it.”

Backers of Ryan’s approach say people like Sharon O’Malley should not worry. They say the plan should unleash a wave of competition that wrings waste out of the health care system and delivers quality care at affordable prices.

Given the popularity of original Medicare, however, many experts think the Romney-Ryan overhaul will be a tough sell — like former President George W. Bush’s ill-fated attempt to introduce private accounts to Social Security.

“Any change is viewed with skepticism, and that is just a starting reality for most people,” said John Rother, president of the National Coalition on Health Care, a nonpartisan group representing a broad range of players in the health care system.

Indeed, even a majority of Republicans — 55 percent — prefer the idea of keeping Medicare as it is, according to a recent Washington Post/Kaiser Family Foundation poll.

“Most people are not thinking of the role Medicare plays in the federal budget,” Rother added. “The idea of (Medicare) insolvency is an abstraction. What matters is, ‘It’s there for me. It works. I can count on it.’ The idea of change is a threatening idea, particularly if it’s couched as being necessary to fix the federal budget.”

The O’Malleys have been married 30 years and consider themselves political independents. They both voted for John McCain in 2008. Mike owns a travel agency. Sharon is a nurse. They have three grown children and have put away some money for retirement. She worries their savings may not be enough.

As she imagined what Ryan’s vision of Medicare might be like for her, Sharon said it could be confusing to shop for insurance among multiple private plans. In her job, she already sees elderly patients flummoxed by the Medicare prescription drug program, which offers seniors a choice among many different plans.

“I truly think they make it very difficult for Medicare recipients to know all the rules of Medicare,” she said. Nearly four in 10 seniors, including younger members of the baby boom generation, would be in the new system by 2030.

So far, most of the debate about the Romney-Ryan proposal has focused on financial risk for future retirees, the chances that health care inflation would outrun the fixed insurance payments they would receive. If so, an older spouse on original Medicare might have to cross-subsidize the younger spouse on the new plan.

Bonnie Burns, who has spent more than 25 years counseling Medicare recipients about their benefits, says it could give rise to a new sort of family dynamic: health care envy.

“I think it would be part and parcel of whatever other family tension is going on,” said Burns, who works with the nonprofit California Health Advocates and is based near Santa Cruz.

But complexity is the biggest potential problem that Burns sees.

The guaranteed benefits the new plans would have to offer haven’t been spelled out, or the rules to prevent marketing abuses, or consumers’ rights in disputes with insurers.

“This would split everything wide open,” said Burns, “None of the components would be the same.”

The private plans currently available through Medicare are closely regulated by the government, so “there hasn’t been a big dispute about what is and is not covered,” said Burns. It’s not clear whether Romney-Ryan would tighten the rules, loosen them or keep them the same.

And she does worry about the financing.

“What do we do if we end up with a whole bunch of old people who can’t afford their premiums?” asked Burns.

Mike O’Malley said he brought this up to his oldest son, who is an Obama supporter. They discussed the Ryan-now Romney Medicare plan over a recent dinner.

He says he told his son he was getting the bad end of the deal “because I’m going to die and you’re going to have to take care of your mother. He goes, ‘I hope you leave us a lot of money.’”

For more on the Medicare debate, see:

Paul Ryan, Romney’s Running Mate: Health Account Backer

Medicare Debate Heats Up Campaign Trail

NAIC Panel Eyes Medicare Supplement Incentives


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.