Please ensure Javascript is enabled for purposes of website accessibility

Hillary Clinton vs. Donald Trump on Medicare

By Matthew Frankel, CFP® – Oct 15, 2016 at 1:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The two candidates have similar plans for Medicare, just different ways to achieve their goals.

Image source: Getty Images.

Medicare is an important issue for Americans -- not only does the program provide health coverage for more than 50 million people, but millions of future American retirees anticipate having Medicare when they turn 65. Surprisingly, Hillary Clinton and Donald Trump aren't too far apart on this issue. Here's what we know at this point about the candidates' plans for Medicare.

Donald Trump: not the typical Republican position on Medicare

Many Republicans want to cut Medicare, or even begin to phase it out altogether. In fact, at the Republican National Convention this summer, the GOP's platform included big cuts for both Social Security and Medicare. In reference to Medicare specifically, the 2016 GOP platform proposes raising the age of eligibility, and an eventual replacement of Medicare with a contribution to a health plan of the beneficiary's choice.

Donald Trump has other ideas. As he said at a campaign rally in late 2015: "What we are going to do is we're going to save Medicare, we're going to save Social Security, we are not going to raise the age, and we're not going to do all the things that everyone else is talking about doing. They are all talking about doing it and you don't have to."

In a nutshell, he plans to save Medicare by creating economic growth, eliminating fraud and waste, and allowing Medicare to negotiate prescription drug prices. While it's unclear how much fraud and waste actually exists within Medicare, increased economic growth like Trump's tax plan is intended to create would result in more tax revenue flowing into Medicare. And Trump has claimed that negotiating prescription drug prices could save up to $300 billion, although the magnitude of the savings has been disputed.

Hillary Clinton: how she wants to preserve Medicare

Democratic presidential candidate Hillary Clinton has pledged to fight back against Republican plans to cut, privatize, or phase out Medicare. And, while the other former Republican candidates may have felt differently, Clinton and Trump are actually in agreement on most issues involving Medicare.

For example, a big part of Clinton's Medicare plan is to allow Medicare to negotiate drug prices. According to Clinton's campaign website, Medicare has tremendous leverage with its tens of millions of beneficiaries, and it could use that to Americans' advantage. Clinton actually takes it a step further than Trump and has pledged to demand higher rebates for low-income Medicare recipients. According to her campaign website, this move alone could save more than $100 billion in Medicare costs.

Although her campaign hasn't specifically said it, I wouldn't be surprised to see Clinton use some of her proposed surtaxes on the wealthiest Americans toward Medicare's funding gap, not unlike the Medicare surtax currently in place. One concrete Medicare tax item proposed by Clinton's campaign is the expansion of the current 3.8% Medicare surtax to owners of pass-through businesses as well as on wage income and net investment income over certain thresholds.

The current additional Medicare taxes are the main reason the program anticipates a surplus through 2020, so this is one area where Clinton and Trump could differ. Trump's plan to repeal the Affordable Care Act would also remove the 3.8% Medicare surtax on investment income, as it was created by the act.

Something needs to change

Regardless of which candidate you agree with, something needs to be done about Medicare. Although Medicare has about $200 billion in reserves now, the program is expected to run at a deficit starting in 2021, and is forecast to be completely depleted by 2028. After this point, across-the-board benefit cuts will be necessary. Medicare covers more than 55 million beneficiaries, so this is an issue that affects a large group of Americans and deserves attention sooner rather than later.

Not far apart ...

During the first two presidential debates, we haven't heard much talk about Medicare, and there's probably a good reason for it. This is one of the few areas where the candidates agree, even when it comes to most of the ways they plan to fix it. The only major difference is that Donald Trump could face an uphill battle against the rest of the Republicans, who don't feel as strongly about preserving Medicare as he does.

Regardless, the fact that we have two presidential candidates who both feel strongly about the need to preserve Medicare could be a big win for America's seniors.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.