Medicare is great, but it can be improved. Here are some suggestions

When we think of government programs that support retirees, many people think primarily of Social Security and forget about Medicare, which is just as vital. Recently, there were more than 67 million Americans enrolled in Medicare — nearly the number who receive Social Security benefits.

Here’s why Medicare matters so much. According to Fidelity, a 65-year-old retiring in 2024 could expect to spend $165,000, on average, on medical and healthcare expenses throughout retirement. That doesn’t even include long-term care, over-the-counter drugs, and most dental services. A married couple should incur an average cost of $330,000.

Image source: Getty Images.

Without Medicare, these numbers would be much higher and could be financially devastating for millions of people.

Medicare Basics

Medicare is a pretty great program, but it could be even better. Before we jump into the module, here’s a quick refresher on Medicare basics.

You can (and usually should) enroll in Medicare as you approach age 65. When you do, you can choose either “original” Medicare, which includes Part A (hospital coverage) and Part B (medical/doctor insurance), or a Medicare Advantage plan, sometimes called Part C. Those who sign up for Original Medicare add usually Part D prescription drug coverage and sometimes a “Medigap” supplemental coverage plan.

So you’ll likely opt for Original Medicare Parts A, B, D and a Medigap plan, or sign up for a Medicare Advantage plan instead. There are pros and cons to both options.

For example:

• Original Medicare gives you access to almost every doctor in the US, and you’ll often only pay 20% of the various costs, with Medicare paying the other 80%. It sure sounds great, but paying just 20% can still be disastrous if you end up with, say, massive hospital bills. (Medigap plans can cover these costs for you, however, for a price.)
• Meanwhile, a Medicare Advantage plan limits your out-of-pocket costs and usually provides dental, vision, and hearing coverage. But to enjoy these low costs, you’ll be limited to using providers and facilities in your plan’s network. And some Medicare Advantage plans have come under fire for denying certain care to members.

Whichever type of Medicare you choose, make sure you sign up on time or you could face a very severe penalty.

Improving Medicare

As good as Medicare is, it can be better. The folks at the Center for Medicare Advocacy have a long list of suggested reforms, such as:

• Limiting out-of-pocket costs in Original Medicare. Right now, Original Medicare has no out-of-pocket cap, leaving some members paying a lot. According to KFF.org, “In 2016, the average person with Medicare coverage spent $5,460 out-of-pocket on healthcare.” People probably spend even more now.
• Mandating that Medigap plans no longer exclude some people because of factors such as pre-existing conditions or age. Right now, if you don’t sign up for a Medigap plan initially, you may not be able to get one later.
• Standardizing Original Medicare and Medicare Advantage plans so they have the same benefits—and adding coverage for dental, vision, and hearing care to Original Medicare.
• Adding long-term care coverage.

These are just a few of the many suggested improvements. It is true that these may increase costs for Medicare, but one way to offset this is suggested by another recommendation: “…ensure that savings obtained through drug negotiations or other means are reinvested in the Medicare program.”

Another advocate for improving Medicare plans is Dr. Sachin Jain, a medical thought leader and current President & CEO of SCAN Group & Health Plan. Here are some of his suggestions:

• To simplify things, the benefits of Medicare Advantage plans should be standardized – just like Medigap plans are now.
• Medicare Advantage plans are rated by a “STAR” system, and Jain advocates changing the criteria so that plans earn stars based more on outcomes than processes. (For example, a plan may earn points when a patient takes their medication, not just when they buy it.)

There’s a lot more you might want to know about Medicare — especially before you need it — so you can make the right decisions for your future health. Keeping up with suggested changes and changes to the program is one way to do this.

Healthcare costs should be a major consideration in your retirement planning — and you may be able to lower your healthcare expenses by making some smart Medicare moves.