Friday, August 24, 2012

Want To Vote Romney-Ryan? Better Have $1 MILLION Saved!

Watching the morning news this morning I almost laughed so hard that my toast nearly was ejected across the room. It appears while "seniors in Florida" don't desire any major changes in Medicare, by something like 64%, the actual polls don't bear this support out. We know Romney and Ryan intend to implement a voucher plan for all those under 55 but these seniors still plan to  vote for that pair by nearly 61% to 39% over Obama. What gives? Are they all suffering from dementia or just slow on the uptake? (One of the analysts on MSNBC observed with great pith and moment that "seniors still haven't connected the Ryan plan with any changes to Medicare")

Of course, many seniors will fall for the selfish meme that "they" - have nothing to fret over if they're in the goodie age bracket of being 55 or over. This is a crass, narcissistic mindset, as I observed before, because by taking such a myopic stance these seniors are spitting on their nieces, nephews and progeny who will be hostage to the Ryan voucher system.

But let me examine the consequences of a Ryan plan in more detail, say for a "marginal" couple (one of slightly different ages).   The real case I will be looking at,  was outlined in an AP story today. Mike, the older O'Malley is 55, and Sharon is 53. As the piece notes:

"Under Ryan's plan, Mike, the older O'Malley would qualify for traditional Medicare in about another decade. Nothing would change for him."

The piece notes that Mike ecstatically replied: "Well, I'm covered."

Yes, indeed, you are. But what of wifey, Sharon? According to the AP piece:

"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"

Good! We have a fiducial mark! Now, let's cut the crap and acknowledge that based on the history of medical costs in terms of treatments, premiums, prescription meds the past ten years, the probability of such costs not going up is about the same as space aliens  landing on my lawn tonight and inviting me to go on a jaunt to Zeta Reticuli. In other words, essentially zero.  In fact, medical costs overall have risen at an average annual inflation rate of as high as 14% and as low as maybe 9%. Let us assume a median rate then of about 12.5% for the forseeable future, well into 2040 for the "Ryan plan" seniors like Sharon. (Assuming the Romney-Ryan axis gets in, which believe it or not, one computer model from the Univ. of Colorado has actually forecast. I don't buy it, of course, unless the Dems sit on their butts and don't react to all the nascent GOP voter suppression tactics.)

Right now, seniors on Medicare are advised to have at least $250, 000 or a quarter million saved - to cover just their extra medical costs. These are things the senior must pay which the gov't won't. Let me give a bit of a rundown now for myself. I am paying $4,900 out of pocket a year now, for the Medicare standard premium ($100 a month) and the balance for a Medicare "Plan F" supplement, and the Prescription D drug plan.

Covered in my Plan F so far have been seven sessions prescribed (by my primary doc) for physical therapy (pulled back muscle)  at $180 per session, and a $985 prostate biopsy. Not covered have been expenses for new eyeglasses ($375 - including eye exam) and dental work (new crown) including two dental cleanings, for about $1,500. As people can see this isn't chump change, and don't get to say you will "do without" the dental work, or the glasses! Also not added is $500 for deductibles for Part F and Part D plans. Oh, I also forgot $175 for dermatological exam and about the same for ENT exam and vacuum cleaning of the right ear.

Anyway, the total costs via traditional Medicare come to $5, 900, and if the total is added up - as it would be for voucher recipient who's allotted a fixed amount of money each year: $9, 870.

In other words, if you are awarded a $10,000 voucher - as Sharon is liable to be (I believe the $15,000 is total bunkum given a Ryan-Romney ticket and their doubled down Bush tax cuts will have compiled another $10-15 trillion in deficits by 2023 - even if the Ds get back in in 2016) you will have used up almost all your allottment. And that is based on costs THIS year! In fact, Sharon will not be on it for another twelve years, meaning 2024.

Projecting her annual medical costs by then (from a similar layout of needs such as I had, but excluding the prostate biopsy) we come to $13, 333. And that's just her first year.

Bear in mind also, I am making ginormous and likely totally fantasy -based assumptions. The first is that the actual voucher given her IS really $10,000 and not $7,000 or $6,000 ("Oops! Sorry, folksies, the deficits the last five years have been much bigger than we planned, 'cause of all the Bush tax cuts we extended!")

The second assumption is that she's actually able to obtain a private insurance plan! Bear in mind, for what it's worth, if Romney -Ryan get in and have the benefit of a large enough GOP edge in congress, they plan to kill "Obamacare". That means insurance companies will again have "pre-existing conditions" on the table, and for her own sake, Sharon better not even have one pre-cancerous mole!

More likely, insurance companies will hedge their bets on taking chances by adding a large deductible - similar to the ones I encountered while seeking private plans when I was 63-64. The lowest one I could find was $5,000.

If then this is added to the tab, we come up with $18,333 for Sharon's first year of being on Ryanized vouchers. That means she will have to cough up $8, 333 out of her own pocket. Project that ahead for 30 years, as do most financial planners, and it comes to $249,990. But this isn't factoring in enhanced medical inflation owing to the "Boomer demand effect" (recall the law of supply and demand!) - and bear in mind the demand for medical care will likely explode with all us geezer Boomers also seeking it. I don't think, in such a case, that 15% a year inflation is too much.  Assume then a "steady" medical inflation uptick rate of 15% per year, and you obtain the new total that Sharon will need to save up to cover 30 yrs. of out of pocket expenses as: $1.12 million.

Ok, look, some nabobs and nitpickers will assert this is "exhorbitant", and I do agree- but don't blame me- blame Ryan's voucher system. Nonetheless, it's still a practical estimate since one huge item I've left out (to reinforce that), is the cost she'd have to absorb for any major operations, say like open heart surgery, or hip replacement or whatever.

Right now, under standard Medicare, those major operations are covered up to 80%, meaning the beneficiary pays 20%. So for a major cardiac operation, costing say $750,000 in 2026, Sharon would have to cough up $150,000. BUT, that'd be under traditional Medicare! Under Ryan's voucher system, that wouldn't apply and there'd be no regs to cover patient costs. I suspect a good estimate is the patient contribution would be 40% so she'd have to pay $300,000 for such an operation. If she got breast cancer, and needed a 6-12 week chemo regimen as well as surgery (mastectomy) , the cost would likely come to over $280,000. But in my calculated scenario for out of pocket expenses, I am excluding all such major expenses  Hence, by way of the typical "Fermi problem" while some factors may be over-estimated, others are under-estimated to compensate.

Here's the real kick in the gut, according to Bonnie Burns, a 25-year Medicare couselor in charge of advising people about benefits and quoted in the piece:  The spouse with the Ryan voucher plan will suffer from "health care envy". Well, you don't say, Bonnie! If I had to pay hundreds of thousands for health care more than my spouse I guess I'd be envious too! Question is, why don't today's seniors simply avoid that fate altogether and not vote the Rich Guy ticket?

Bottom line: Sharon better have saved a lot of moola  (just for her medical care) by the time she turns 65 if the Romney-Ryan axis prevails in November! If not, she better hope hubby Mike wins a lotto, or leaves her with the equivalent of a lotto-magnitude life insurance policy....if he croaks before she does.

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