What I just learned, as I am about to be one of those eligible, is that my first date of eligibility is not the day I turn 65, but the first day of the month in which I turn 65. Whoa. What’s wrong with that picture? My birthday is the 13th so for 12 days the government is paying for my Medicare coverage. As it turns out, I have other insurance for which I’m paying a premium. But since Medicare becomes my primary insurance once I’m eligible, I get to reduce (or eliminate) my other insurance, not on the 13th, but on the first day of the month. I’ve just saved half a month’s worth of premium which for most people is at least a few hundred dollars.
That’s wrong. Look, I’m all for everyone having health insurance and would probably support having universal coverage through a single-payer system like Medicare. But until that happens, it seems to me that I shouldn’t get a free ride for those 12 days.
Some will argue that Medicare is not free, that is, we pay for coverage (it’s called the Medicare Income-Related Monthly Adjustment Amount). But Part A (hospital insurance) has no such payment so is, in fact free. And Part B, which pays for doctor visits, costs only $104 per month unless my income is above a threshold. The threshold is currently $85,000 for singles and $170,000 for couples filing jointly. If I make over that amount I pay an additional $42. For purposes of this discussion I’m eliminating the prescription drug benefit since, indeed, I would have to pay for that coverage.
So the government is paying for half a month for my Part A and a very reduced amount for my part B. Since there are just as many people born on the 30th of each month as there are born on the 1st, on average it’s paying for 15 days for all 300,000 people who turn 65 during that month. And the govt. will pay that every month until the last boomer turns 65 in 2029.
According to the National Conference of State Legislatures, the average health insurance premium for singles in 2012 was $5615, or $468 per month. In effect, the govt. is saving me half of that amount or $234. And that means that 300,000 people are saving that much, for a total annual savings of $842 million.
You might say, “Well, that’s not real money. It’s savings that doesn’t go to my private insurer.” True, but according to the National Committee to Preserve Social Security and Medicare, the cost per enrollee in Medicare for 2010 was $9,973 (excluding Part D prescription drug plan). Admittedly more is spent on the older enrollees. But even if the new enrollee costs half the amount, or about $5,000 per year, that’s $400+ per month or, once again, $200 per enrollee for that half month. 300,000 new enrollees per month costing Medicare $200 each equals $60 million per month or $720 million per year. For 18 years.
That’s a lot of money, even by Washington standards. But more important, it’s wrong. I shouldn’t be getting those free days, especially if my income is over the threshold. I and my employer should be paying the costs, just as they do the month before I become 65.
It seems to me that it would be a relatively simple thing to change this system so you become eligible for Medicare on the actual day you turn 65, not the first of the month. Yes there would be some cost for system programming changes. But really, is it that difficult? It certainly wouldn’t cost $720 million. And it’s the right thing to do.