Medicare Opt-Out

One proposal floating around Republican circles (and formally introduced in the Senate’s Retirement Freedom Act) would allow senior citizens to decide to opt-out of Medicare Part A coverage without jeopardizing their eligibility for Social Security retirement benefits. Under current law, senior citizens are automatically enrolled in Medicare Part A when they begin to claim Social Security benefits. Medicare Part A is free for many taxpayers who have satisfied certain work-related requirements, and for others, the premiums can be deducted from Social Security benefits.

We asked two professors and Tax Facts authors with opposing political viewpoints to share their opinions about this aspect of the retirement legislation and its potential impact on the insurance markets.

Their Votes:

Byrnes

Bloink

Their Reasons:

Below is a summary of the debate that ensued between the two professors.

Byrnes: Senior citizens—and, frankly, all taxpayers—should be entitled to make their own decisions regarding health coverage without the government stepping in to push them toward one option. This bill would go a long way toward allowing senior citizens to fully make their own choices regarding health coverage, and I think it’s a step in the right direction for this country.

Bloink: The entire rationale behind automatically enrolling senior citizens in Medicare Part A coverage is a recognition that this group of individuals is likely to need significant medical care, and they should have access to that care without the need for going through the complicated motions of determining the level of care that they might need. The bottom line is that someone has to pay for this coverage, and the government has found a way of providing mandatory health coverage on a fairly subsidized basis for at least one particularly susceptible group of Americans.

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Byrnes: Senior citizens have other options and should be allowed to choose from the entire pool of options without having their hands forced by the politics of the Social Security system and entitlement programs. If someone thinks that private health insurance is the way to go, politicians shouldn’t have the right to step in and insert their own opinions by requiring this group to choose a single health coverage option.

Bloink: This bill provides no real safeguards to make sure that American senior citizens have the access to health insurance coverage that they need—even if someone is lucky enough to escape major health issues, at some point, the odds are simply there that a senior citizen will need the coverage provided by our Medicare Part A system. Of course declining Medicare Part A will be attractive for some people who must pay for the coverage—they’ll get the benefit of the increased Social Security check without any real assurance that they will have the health coverage that they will eventually need. Senior citizens who are retired may or may not have the resources necessary to take the financial hit caused by a huge medical bill—remembering that private health insurance in America doesn’t cover every expense.

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Byrnes: We aren’t getting rid of Medicare Part A insurance, we’re just saying that senior citizens shouldn’t be forced into it. The government shouldn’t get to decide what any given person’s health situation calls for in terms of insurance coverage—seniors know their own needs better than the government, and this new proposal recognizes this basic fact. Why should seniors have to pay for benefits that they don’t need or want?

Bloink: But we have to consider the system as a whole, and the benefits that Medicare Part A is designed to provide. Medicare Part A is hospital insurance—and while the coverage is not comprehensive with respect to long-term care, it is one element of an extremely fragile system that, frankly, has been crumbling for years. Hospital and long-term care coverage is extremely expensive, and costs are rising. We unfortunately haven’t found a way to fix that yet, or to make sure that every American has access to the type of long-term care insurance that they might eventually need, but Medicare helps by providing some level of coverage when absolutely needed. By allowing seniors to opt-out of Medicare Part A coverage, we could devastate the insurance system as we know it.