COLUMNS

JUST PLAIN TALK: Christmas comes early or is it The Grinch?

Buz Livingston
Buz Livingston

Christmas came a few weeks early for me. Converting an idea to the written word can be a problem, commonly known as writer’s block. When I first read about Speaker Paul Ryan’s plan to resurrect his Medicare replacement folly, I thought President-elect Trump would never go for it. On the campaign trail, Trump touted support for Medicare along with Social Security. Over the Thanksgiving holiday, news broke indicating Representative Tom Price (R-GA) would serve President Trump as a Cabinet Secretary of Health and Human Services. See you later, writer’s block.

Price has long led the charge to drastically overhaul Medicare by replacing it with a fixed dollar amount for individual health insurance. While plugged as a method to reduce healthcare costs, according to a 2014 Center for Medicare and Medicaid report, this notion would, in fact, increase financial burdens for older Americans. Since Florida has a higher percentage of elderly residents, the effect would be more dramatic for Florida. If you are 35 or 65, it does not matter; Florida residents benefit from Medicare. Locally, Walton County vacation home purchases by people near retirement age would decline, and discretionary spending by tourists would fall as well. Florida attracts a high percent of older visitors, some stay; some don’t. A bad day at the beach is better than a good day in Cleveland. Sure we get young folks, but they are not our desired market.

Currently, with Medicare, healthcare inflation outpaces the consumer price index, a standard inflation measure. When making a retirement projection, we use 5 percent for health care costs versus 2.5 percent for non-healthcare-related expenses. Even with Medicare, healthcare can be a burden during retirement, but Medicare coverage is “guaranteed issue” so everyone has access to insurance regardless of pre-existing conditions. Most people have insurance through an employer-sponsored plan, so they avoid medical underwriting. After retirement and with no Medicare, navigating individual health insurance will be problematic for most people.

When politicians talk about Medicare going broke, they mean Medicare Part A trust fund will only be able to pay full benefits until 2029. However, the Part A Trust Fund will still be able to pay 79 percent of projected benefits until 2040, not good but not “broke.” As costs for Medicare Part B, C, and D rise, premiums can too, problem solved. Don’t throw out the baby with the bath water.

Like all financial decisions, it boils down to choices. For example, Medicare could negotiate directly with pharmaceutical companies for bulk drug discounts, but we don’t. As you age, healthcare costs increase. The most prosperous nation in world’s history should be able to figure it out.The choice is ours. Without Medicare, buying a semi-automatic handgun could be easier than buying health insurance.

You can’t always get what you want but Buz Livingston, CFP can help figure out what you need. For specific recommendations visit us online at livingstonfinancial.net or come by our office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.