Medicare provides a critical healthcare safety net to tens of millions of American seniors, but the program's costs are soaring as more baby boomers sign up and healthcare gets more complex, and that's got Washington, D.C., lawmakers trying to come up with fixes to keep the program on solid financial footing.

Unfortunately, these fixes could cause significant changes to Medicare that impact choice and cost sharing and, unsurprisingly, that's drawn the ire of budget-conscious seniors and the organizations, including AARP, that advocate for them.

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A lot to dislike

Eric Schneidewind is AARPs president and a member of its board of directors, and he's recently taken to the airwaves to criticize proposals that could reduce Medicare benefits and increase Medicare recipients' expenses. Specifically, Schneidewind has called out House Speaker Paul Ryan's plan to replace Medicare with vouchers to buy private insurance in part because it eliminates guaranteed coverage levels. 

As a refresher, Part A covers 100% of your hospitalization costs up to 60 days, after you've met a $1,316 deductible. Part B covers other common healthcare expenses, such as doctor visits and lab work, at 80%, after you meet a $183 deductible. Part B also includes certain preventative care for free, such as cardiovascular disease screening.

Replacing guaranteed benefits with private insurance vouchers could also limit doctor choice, because private healthcare insurance typically requires patients to seek in-network care, while Medicare is much more widely accepted. For instance, many retirees that live in two places during the year prefer Medicare over private insurance because most doctors accept Medicare.

Proponents of privatizing Medicare will remind people that Medicare Part A and Part B don't include out-of-pocket caps on patient spending, while most private plans do. However, that ignores the fact that many Part A and Part B recipients already buy Medigap plans that pick up expenses uncovered by Part A and Part B. Similarly, while private plans often include drug coverage alongside healthcare coverage, most Medicare Part A and Part B recipients buy Part D drug coverage to handle their prescription drug expenses.

A senior woman is shopping for healthcare supplies at a pharmacy.

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What's at stake?

The main argument made in support of big changes to Medicare is that it is going broke. However, as Schneidewind points out, that's not really true.

While rising costs will strain Medicare's trust fund, it is 100% funded through 2029 and 79% through 2040. Yes, changes will need to be made, but those changes might not have to be as drastic as what's being suggested in Washington by Ryan and others.

If Congress overreacts to Medicare's financial situation by implementing changes that fundamentally change Medicare into a program that limits doctor choice and increases cost-sharing co-pays and deductibles by shifting younger seniors into a voucher program, then even grandfathered current Medicare recipients could get stung.

Currently, Part B premiums are relatively affordable. However, those premiums are affordable because high-cost care provided to elderly seniors is offset by premiums that are being paid by younger and healthier seniors. Remove young, healthy seniors from Medicare and premiums charged to those who get grandfathered into traditional Medicare could increase sharply. 

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