Ryan, Romney, Obama, Oh My!

Each of the presidential candidates, Mitt Romney and Barack Obama, has given a differing view about the future of Medicare and Medicaid (Medi-Cal in California).  Each of the candidates argues that their plan will save money.  However, a lot of confusion continues to exist over whose plan saves the most for seniors, and whose plan might negate any Medi-Cal planning done already?

Currently, Medicare provides some guaranteed coverage for seniors and some optional coverages.  The optional portions of the plan must be paid through premiums, which may reduce the out-of-pocket cost of the care received.  For many low-income seniors, Medi-Cal benefits can also be claimed to help cover the costs of care.  

Obama, for his part, largely keeps the current systems in place.  Guaranteed payment will continue to be made for the poor and the elderly.  The plan is intended to save over $700 billion for the years 2013-2022 by cutting reimbursement rates to Medicare and Medicaid providers, changing the structure of payments to private insurers under Medicare Advantage, limiting the growth of Medicare.  Over time, the anticipated savings will increase each year because under the current system, Medicare and Medicaid are expected to cost more money.  Under Obama’s policies, Medi-Cal will continue to exist, but given the changes your Medi-Cal estate and insurance plan should be reviewed.

Romney’s plan, which was originally proposed by Vice Presidential candidate Paul Ryan, revamps the current system for Americans who are not already age 55 or older.  In his plan, for people who are under 55, healthcare would work like a subsidy toward regular insurance, with the elderly receiving an insurance credit.  The “premium support” would work similarly to the health-care exchanges already underway for all Americans: the government would define certain characteristics private insurance plans would need to have and allow seniors to choose from among those plans.  Some seniors would receive a subsidy for their insurance premiums.  In the first version of his plan Paul Ryan only allowed for a subsidy system and the Congressional Budget Office (CBO) estimated that seniors could pay over $6,000 more per year by 2022.  However, the Romney-Ryan plan promotes a traditional Medicare option in addition to the subsidy system and new numbers have not been calculated.  Although this policy does not end Medicare and Medi-Cal, it would significantly change how the program is set up and run.  In both iterations, Ryan has assumed that the $700 billion in Medicare savings would still occur.

Your estate plan as a whole should be designed to meet your long-term care needs and should include your health care instructions and power of attorney documents.  Medi-Cal planning is another important part of your long-term care planning.  If you are over age 55, you should consult with your attorney to determine whether your current planning will help you qualify for Medi-Cal now and in the coming years.  Depending on your age and the cost of the premium, you may also wish to consider long-term care insurance.  If you are under age 55, you still have time to evaluate your financial health and consider outside services such as long-term care insurance.  Additionally, verifying that your healthcare directives and financial powers of attorney are up to date is also important for your annual review.  However, perhaps intense Medi-Cal planning should wait until after November!

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