39 Million Americans Could Be Affected By Hillary Clinton's Medicare Plan -- Will You Be One of Them?

By Markets Fool.com

Democratic presidential nominee Hillary Clinton promises to change Medicare in perhaps the most drastic way since the program was created in 1965. At least 39 million Americans could be affected by this Medicare change right out of the gate if it's implemented.Maybe even you.

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Lowering the bar

Currently, Medicare eligibility is limited to Americans age 65 or older except for individuals with disabilities or end stage renal disease. Clinton wants to expand the number of people enrolled in the federal healthcare program by lowering the age requirement to 55.

Details of Clinton's plan haven't been announced yet. Her written public position only says that she will "expand Medicare by allowing people 55 years or older to opt in while protecting the traditional Medicare program." While this statement doesn't shed much light on how the proposed approach will work, two things are clear. First, the key components of Medicare as it stands now won't change. Second, the expansion would be optional for Americans who want to participate in Medicare.

Clinton initially flirted with the idea of setting the Medicare age threshold at 50. Had she gone with this lower age limit, around 63 million Americans could have been impacted. The proposal to set the threshold at 55 would potentially allow one out of every eight people in the country who aren't already enrolled in Medicare to sign up.

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Weighing the opt-in options

Not all of the more than 39 million Americans between the ages of 55 and 64 would want to participate in Medicare. There are several reasons why many people would choose to hold off.

Out-of-pocket spending stands out as perhaps the biggest barrier. Medicare doesn't have an out-of-pocket maximum like private health insurance plans include. People who have high yearly healthcare costs would be worse off on the federal healthcare program than they would on an employer-sponsored insurance plan or on individual coverage that meets Obamacare-mandated requirements.

Provider selection could be another issue. A Kaiser Family Foundation survey conducted in 2015 found that 28% of physicians responding said they wouldn't accept new Medicare patients. Unlike the initial promise with Obamacare, there's definitely no guarantee with Clinton's "Medicare for more" proposal that if you like your doctor you can keep your doctor.

Benefits, especially for drugs, is another challenge. Medicare Part D prescription drug plans tend to have more limited drug formularies than other insurance coverage. For example, healthcare consulting firm Avalere examined 22 classes of commonly used drugs. Medicare Part D plans covered 70% of the drugs, while Obamacare exchange plans covered 85%.

Cost could be another problem. We don't know what the price tag to buy into Medicare will be for the expanded age group. If it's too high, more people will opt out than opt in.Still, many Americans who aren't eligible for Medicare now could find that it's a good alternative, especially if they're relatively healthy and spend less on healthcare.

Good idea?

Is adding more people to a program that won't have enough money to fund 100% of its current obligations 12 years from now a good idea? It depends.

If the plan doesn't bring in enough premiums to cover the additional costs, Medicare could be put in worse shape than it is now. If rearranging deck chairs on the Titanic wasn't a good idea, pouring water into the ship definitely wouldn't be smart.

On the other hand, people between the ages of 55 and 64 tend to be healthier on average than older Americans. The addition of healthier members to Medicare could lower the per-person costs. If the premiums for these relatively younger individuals buying in are set just right, the "Medicare for more" idea could work.

The most recent major change to Medicare, former President George W. Bush's introduction of Medicare Part D, has been widely hailed as a success. It's possible that Clinton's proposed expansion to the program could also prove to be a winner. Two major hurdles remain for Clinton: getting elected and then getting her proposal through Congress. The latter will probably be much more difficult than the former.

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