A critical part of your retirement planning is to make sure you have sufficient medical insurance. Your options will be significantly influenced by our political leaders' positions on how the government should pay for Medicare and health care for retirees over the next few years and decades. In that spirit, let's examine the positions taken by the leading 2016 presidential candidates on these topics, to help you decide how to vote in the upcoming primaries and the presidential election next fall.
Health Care 101: Here's what you need to know
Some background is needed to help you understand a few critical issues. Retirees age 65 and older are eligible for Medicare, a single-payer system that was established in 1966. Under Medicare, the government pays for basic medical services, and individuals are free to purchase coverage from private insurance companies to fill in gaps in Medicare's coverage.
The vast majority of current retirees receive health care through Medicare, which has no exclusions for pre-existing health conditions. Many retirees buy Medigap or Medicare Advantage Plans so they receive more comprehensive coverage than the basic Medicare program. Medicare Part A covers in-patient expenses and doesn't require a premium for most retirees. Additional premiums are required for Part B (outpatient expenses) and Part D (prescription drugs). Both Part B and D premiums are means-tested, meaning that additional premiums are required for high-income retirees.
Before age 65, retirees can obtain health insurance coverage in one of the following ways:
- Work for an employer who provides medical insurance for active employees
- Buy retiree medical insurance from a former employer who offers such coverage to retirees who meet their eligibility conditions
- Buy COBRA insurance from a prior employer (for up to 18 months after leaving that employer)
- Buy individually purchased insurance from an insurance company in exchanges established under the Affordable Care Act (ACA)
Before the ACA's universal coverage features became effective in 2014, insurance companies were allowed to exclude people from purchasing insurance due to pre-existing health conditions. Because of that, until 2014, many Americans were significantly disadvantaged if they weren't eligible for health insurance coverage under the first three methods listed above. While this potentially impacts people of all ages, it's a particular problem for pre-age 65 retirees who are more likely to have pre-existing conditions and less likely to be eligible for work-based health care plans. This is a critical point to understand when assessing the candidates' views on the ACA, aka Obamacare.
Politicians who advocate repeal of the ACA without a replacement program that allows anybody to be able to buy health insurance without exclusions for pre-existing conditions are, in effect, advocating a return to the pre-2014 days, when there were significant barriers to retiring before age 65 due to lack of health insurance.
To find out how the candidates' are weighing in on this issue, below we'll first look at positions posted on each candidate's website; when no such positions are posted, we'll look at recent quotes and interviews in the media or from the debates that may be more spontaneous, often from the helpful website OnTheIssues.
The candidates are listed in order of a recent poll on their ratings.
What the Democratic candidates say
From Hillary Clinton's website:
- Supports the ACA and will defend it against efforts to appeal it.
- Opposes privatization of Medicare or phasing it out.
- Would allow Medicare to negotiate prescription drugs costs to help drive down their costs.
- Advocates Medicare delivery reforms to improve value and quality of care.
From Bernie Sanders' website:
- Would allow Medicare to negotiate prescription drug costs and allow drugs to be imported from Canada, in an effort to drive down costs.
- Would restore discounts to seniors under Medicare Part D, and would close the Medicare donut hole in 2017, three years earlier than the current schedule.
Sanders has been quoted as supporting the ACA and the goal of universal coverage. He'd go a step farther and implement a single-payer system, basically "Medicare for all."
What the Republican candidates say
The websites of Marco Rubio, Jeb Bush, Rand Paul, John Kasich, and Carly Fiorina contain positions on Medicare and/or retiree medical coverage:
- Rubio would make no changes for those in retirement or near retirement. He would transition Medicare to a premium support system, which would give seniors a fixed amount to purchase health insurance. They could have the option of either Medicare or a private provider. Rubio would repeal the ACA. On his site, he states that he'd provide all Americans with a tax credit that can be used to purchase private insurance, although he has no stated position on whether insurance companies can allow exclusions for pre-existing conditions
- Bush advocates repeal of the ACA. His website states he would "enable portable, secure coverage for all Americans" which, on face value, would appear to preclude insurance companies from excluding coverage due to pre-existing conditions (although the website doesn't provide more specific details). He would provide a tax credit to allow Americans to purchase affordable, portable health plans, and would consider increasing the use of health savings accounts (HSAs) to help with out-of-pocket costs.
- Paul would repeal the ACA. His website has no positions on Medicare, universal coverage, and whether insurance companies can allow exclusions for pre-existing conditions. He's been quoted as supporting free-market principles and opposing governmental intervention in health care, which could be interpreted as allowing insurance companies freedom to structuring the policies they offer, including allowing exclusions for pre-existing conditions.
- Kasich would repeal the ACA. He cites initiatives in his home state of Ohio that would improve the quality and delivery of care if expanded nationwide. He's silent on whether insurance companies can be allowed to exclude insurance due to pre-existing conditions, and he appears not to take any position on Medicare.
- Fiorina's website advocates repeal of the ACA; she's also opposed to government intervention in health care. She's not specific on reforms to Medicare, stating that the government needs to get its house in order to tackle entitlement programs like Medicare.
The websites of the following candidates did not post positions on Medicare or retiree medical care: Donald J. Trump, Ben Carson, and Ted Cruz. All of the information below comes from media quotes and interviews, listed in the order of a recent poll on the candidates' ratings.
- Trump opposes cuts to Medicare and supports repeal of the ACA. He doesn't appear to take any position on a potential replacement for the ACA, which would mean a return to the pre-2014 days regarding pre-age 65 retiree health coverage.
- Carson has previously said he would dismantle the national social insurance program for the elderly (Medicare) and replace it with a private voucher system. He recently changed his mind when asked on Facebook if he wanted to abolish Medicare and said he'll soon offer a plan to "save money and deliver better service to our nation's seniors." He'd use HSAs to reduce the need for government assistance programs like Medicare and Medicaid. He's also been quoted as saying Obamacare is the "worst thing since slavery." While Carson apparently is in favor of repealing the ACA, he does not appear to have suggested specific proposals to replace the ACA and, in particular, provide for universal coverage or prohibit exclusions due to pre-existing conditions.
- Cruz would raise Medicare's eligibility age to save costs. He advocates appeal of the ACA and has actively fought its implementation. He has proposed the Health Care Choice Act as an alternative to ACA, although it's unclear if it allows universal coverage and prohibition of exclusions due to pre-existing conditions.
As with Social Security and retirement plans, there are clear differences between the Democratic and Republican candidates. The Democrats want to protect Medicare and are specific about how all Americans, including early retirees, could obtain health care coverage.
The Republicans are united in their desire to repeal the ACA. Only Bush and Rubio imply that all Americans should be able to purchase health care coverage, although they don't appear to offer specific details on achieving that goal.
Americans and our leaders will need sort out conflicting goals between freedom of choice including minimizing governmental intervention in health care, and providing health care for all citizens. If you let insurance companies exclude people for pre-existing conditions, some citizens will be denied coverage. If you prevent insurance companies from excluding people with pre-existing conditions, you can't give people the freedom whether to buy health insurance, because some will opt out until just before they get sick, potentially causing a spiral in costs. Either we need to agree to universal coverage and find the collective means to pay for it, or we need to live with the possibility that millions of Americans, including pre-age 65 retirees, won't be able to obtain necessary health care coverage.
Stay tuned as the presidential campaign heats up and the candidates continue to refine their positions about Medicare and health care for all Americans, including retirees.