Reflections on Medicare

Today I signed up for Part B of Medicare - which is where many of the costs of the system come from.  I also signed up for all the other coverages which will make my medical bills, when I fully retire, for my wife and I, about $1000 per month (including a part b,d and f policy).   I wondered what kind of a deal I was getting.  Coincidentally it was also a day when Congressman Paul Ryan and Senator Ron Wyden announced a pretty good plan for reducing the costs curves on Medicare - it correctly in my opinion begins to add some consumer discipline to senior health care without pulling the rug out from the social equity parts of the current Medicare system.

First, I should say something about Social Security offices.  I've had three encounters with Social Security offices - two yesterday and one about six months ago when I turned 65(which was handled on the net and with one phone call).  While there were some annoyances in the processing of forms (minor) I can say that the people I have encountered have been uniformly helpful and well informed.

But here is the question I began to think about when I filled out all my forms.  The company I retired from was charged about $1500 a month for our medical insurance. I required my employees, last year, to make both a $40 co-pay and a cost sharing of 10% of the premium.  Undoubtedly costs would have gone up had I continued to work for them.   But is the $1000 per month (for all of the coverages for both of us) actually worth it?  That depends.   I keep very detailed records on taxes paid and so I can go back and calculate the money that I have paid into the system over my working life.   The total amounts to a bit more than $48,000 in current dollars or something north of $70,000 in present value (that is a conservative estimate).   In any event the sum total of current payments (which continue to be made) and a conservative flow of the value of an annuity which could be used to fund part of our health care costs would produce a negative or severely negative investment.   Since the additions beyond Part A are significantly skewed for higher income payments - if our income drops significantly in the next couple of years, the net negativity will diminish by some.

I found today that at the end of my COBRA period I will also have to self insure for dental and vision coverage which would add to the negative investment over time.   The major difference however is that the government programs plus the supplement have purchased a set of benefits that are richer than I had when I was employed full time and ones that I would not likely choose for myself.