IF YOU’RE IN a financial hole, is it prudent to keep digging? There are 60 million Americans covered by Medicare, including 20 million who have opted for Medicare Advantage. These beneficiaries paid for their coverage through payroll taxes during their working years, and they currently pay with premiums and out-of-pocket cost sharing, as well as through taxes on Social Security benefits. Still, this covers only a portion of total costs. In 2013, 38% of Medicare’s costs came from payroll taxes and 13% from Medicare premiums, but 41% came from general tax revenue. Our immediate problem: All of the above funding is inadequate to sustain current Medicare, let alone expand it. Medicare’s Trustees estimate the 75-year unfunded liability at $37 trillion. But that’s not the full story. According to the 2019 Trustees Report, “The estimated depletion date for the [Hospital Insurance] trust fund is 2026... The fund has not met the Trustees’ formal test of short-range financial adequacy since 2003… the difference between Medicare’s total outlays and its dedicated financing sources is projected to exceed 45% of outlays within 7 years.” As a group, seniors consume 36% of all U.S. health care spending. Yet Medicare benefits are deemed inadequate by many, because of deductibles and co-pays, coverage gaps and the absence of an out-of-pocket limit. As a result, most beneficiaries either purchase Medigap insurance or opt for Medicare Advantage, thereby filling some of those coverage gaps. Premiums for Medigap vary widely, but $200 a month is fairly typical. Medicare Advantage often also requires a monthly premium. Keep in mind that this group is nearly 20% of all Americans and it’s growing rapidly—and yet now we’re debating whether to go beyond Medicare for seniors to offering universal health care to all Americans. The added cost would be significant—and I’m talking here only about seniors. Those of us on Medicare would have all out-of-pocket costs eliminated, plus coverage may be expanded to include dental, vision, hearing and long-term “custodial” care—all areas not regularly covered by Medicare. It is estimated that 75% of seniors who need a hearing aid don’t have one. The typical cost is $4,500. Meanwhile, 70% who have trouble eating because of their teeth have not seen a dentist in a year, and 45% who have trouble seeing have avoided an eye exam. Is there pent-up demand? You bet. What about long-term care? Covering nursing home costs is so risky and costly that many insurers have ceased selling long-term-care insurance. After initially being included in Obamacare proposals, it was dropped because it wasn’t feasible. Today, Medicaid covers 62% of nursing home residents—at an annual cost of $55 billion. What if it became 100%? What if the government started covering all kinds of long-term care, including care at home and in assisted living facilities? So let’s think about this: We have the potential for 60 million Americans in an already underfunded program gaining substantial new benefits. Most already struggle to pay their health care costs, so it would be tough to get them to pay even more. Who will pay the added cost of universal care for me and my fellow senior citizens? Hey millennial, can you loan me a dime? Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Missing the Point, An Old Man's Gripes, Money Pit and Crying Poverty. Follow Dick on Twitter @QuinnsComments. [xyz-ihs snippet="Donate"]

I RECALL PAYDAY IN 1961, when I was at my first job. There was a paymaster who would deliver our paychecks. At break time, we would be off to the nearest bank to cash our checks. I deposited most of mine in a savings account, plus $2 in my Christmas Club account. But many of my fellow workers took the whole check in cash. I always thought taking cash was a bit risky. I once got up the nerve to ask a few friends why they took cash. One told me that, once home, he placed the cash in envelopes designated for various bills and then paid those bills in cash. Another friend said he didn’t want his wife to know how much he made. He gave her an allowance and kept the rest. This was especially important when overtime pay was involved. The extra cash was not, in his view, part of the family’s finances. I later realized this was a common attitude. Whatever the man earned was his money. Remember, this was 61 years ago. A few years later, the paymaster was gone and checks were mailed home. There was near panic in some parts of the company as workers scrambled to change the address where the checks were sent. Many designated their work address. Those of us in employee benefits earned the ire of the unions when we decided to mail group term-life insurance certificates to each employee. It never occurred to me that not only did many spouses not know the amount of insurance in force, but also many didn’t know there was life insurance. The insurance was equal to one-and-a-half-times base annual pay. In a few instances, we created family strife when it was learned the spouse wasn’t the beneficiary. This—what I call pure selfishness—extended beyond pay. Before the Employee Retirement Income Security Act (ERISA) of 1974, a worker had total control over his pension, married or not. To maximize his benefit, it was normal for workers to take a single-life annuity. But ERISA required that, if married, the pension would be paid as a joint-and-survivor annuity, unless the spouse waived her right. I welcomed that change not only because it was fair, but also I was tired of receiving calls from new widows looking for their pension and having to tell them there was none. “But my George told me I would get everything I deserved” carried a double meaning, alas. In 1984, the Retirement Equity Act created the qualified domestic relations order (QDRO) and added a new wrinkle to the male-dominated “it’s mine, I earned it” attitude. Now, it was clear a spouse was entitled to a portion of the worker’s pension and other retirement income benefits—that they had earned the money together. This change was a real shock to some workers and retirees. I received more than one threat from workers faced with the prospect of losing a portion of their pension to an ex-spouse. One older retiree showed up at the building with a gun when his pension was cut in half. He had ignored the QDRO that had been filed, and I had no choice but to enforce it. Thankfully, those one-sided days of handling family income are long gone—I hope. Many of us, me included, dislike excessive government regulation. But there are times when society needs a push to do the right thing.

As much as I hate to admit it and exercise regular self-denial, I am old. All the signs are there, my date of birth for one, right in the middle of WWII. There are maybe ten of us born in 1943. Actually 2.9 million of which about 50% can still read HD. I take the occasional nap-unintentionally though. I bother people by engaging in conversation and telling stories, my grandchildren call me Pa. Actually nowadays my children do as well.  But the most obvious sign - as long as I don’t look in the mirror- is a decline in my appetite. It’s not a clinical thing or extreme which can happen, I just fill up with less. Actually it's common for older people to eat less, a phenomenon sometimes referred to as "anorexia of aging." That sounds rather dire, but the fact is as people age, their metabolism slows down and they often become less physically active - note nap reference, meaning they require fewer calories to maintain their weight.  The only things about me that are as physically active as in my younger years are my typing fingers - both of them.  All this has resulted in a fridge full of leftovers, much from restaurants. Tonight my dining choices include leftover Chinese or leftover eggplant parmigiana. It’s been a busy week. I’m going with the Chinese as it’s a day older than the Italian.  Unless we are in a fine dining establishment we have taken to asking for take away boxes before being served. We put the soon to be leftovers in the boxes before we eat. It’s neater that way. I haven’t figured out how to successfully and discreetly unbox if we miscalculated and want to eat more.  We have not and will not split an entree although we do order one desert on occasion often at the urging of the server - better one than none. Last week we went to dinner with cousins. Connie and I each ordered a meal and cousins split a salad. I was embarrassed- yeah, I know, why? It made me feel like a glutton with my chicken gumbo meal. If you are going out to dinner, have dinner.  Have you noticed there is very little food you can buy just sufficient for two? I understand why, but it’s still annoying and it helps to add to leftovers. We like cranberry sauce with chicken dishes, but you can only get a 15 oz can. They used to make a can half that size, but no more. So now after a chicken dinner, the plastic wrapped dish with cranberries sits in the fridge until we figure out what to eat it with - or throw it out. I was looking for Cheerios the other day. All they had were the family size box. I’ll be eating honey nut Cheerios for six months, long past the “Best By” date - an estimate of declining taste quality, not safety.  The cohort life expectancy, which attempts to account for improvements in mortality over a person's lifetime, says for people born in 1943 it is 71.7 years. Good thing those “use by” and “best by” dates are bad guesses.  Getting old can be frustrating. 

MY LEAST FAVORITE time of the year is fast approaching—the holidays. The curmudgeonly part of me will be on full display. Don’t get me wrong, there are many aspects that I like. I enjoy the spirit of Christmas, the music, getting together with friends and family, and eating. But let’s face it, there’s a lot of stress, aggravation—and money to be spent. My DVR stores A Christmas Story, which is my favorite holiday movie and which I watch every December. I can relate to the family in the movie, including the temperamental coal furnace, and I sympathize with Ralphie. Unlike Ralphie, I never wanted a Red Ryder rifle. Instead, I wanted electric trains, which I did get one year. I can also relate to Ralphie’s pink bunny pajamas. One year, I asked for a basketball—pretty simple. What I received was a beach ball imprinted like a basketball. In the first week of November, I was hearing holiday songs on the radio and I passed a church already decorated for Christmas, including a lighted tree on the lawn. Needless to say, stores have been stocked with Christmas decorations since Labor Day. Is there an actual season any longer? I began writing this before visiting—not voluntarily—a Hobby Lobby, where we and many other shoppers were loading up on Christmas decorations. That’s despite our storage area already bursting with past years’ bargains. [caption id="attachment_1535643" align="alignright" width="400"] A young Dick Quinn (second from left) at his grandmother's house for the holidays circa 1953[/caption] Spend $269 on decorations? That’s what some research says the average American lavishes on lights, tinsel and such. My least favorite holiday items are those lawn blow-up things, not classy in my humble opinion. My wife and I gave up exchanging gifts years ago. There’s simply nothing we want or need. Let’s face it, what happens to many gifts—perhaps most—is they’re returned, broken in a day or two, or shortly forgotten and go unused. I recall the stress of finding the right gift for my wife. One year, decades ago, I thought I had it. I presented her with a microwave oven. It was a cold Christmas, but my marriage survived. Thereafter, it was one-stop shopping at my favorite jeweler. Folks who celebrate Hanukkah aren’t immune to all this. The best research I could find estimated the average spent on that holiday at around $600. They say it’s the thought that counts. I’m not so sure. A National Retail Federation study found that retailers expect about 17.8% of all merchandise sold in the holiday season to be returned, either online or in person. That’s $158 billion worth of goods. Near the top of the return list is apparel. I can relate. As a kid, I received an endless supply of clip-on ties, socks and underwear. Whoopee. Think of all the time, stress and money that goes into shopping. It’s greatly stimulated by advertising—often misleading when it comes to toys that don’t actually fly. Then there’s the work involved. Dragging decorations out of storage, putting them up—occasionally at dangerous heights—and then putting all the stuff back after a few weeks. Fun, really? Or is it keeping up with the neighbors? [xyz-ihs snippet="Holiday-Donate"] A simple wreath on the door would do, and would certainly be more traditional. Most Americans didn’t even decorate or have Christmas trees until the mid-19th century. When I was a child, we went to Grandma’s house for Thanksgiving dinner and Christmas. I’ve come to realize that Grandma didn’t have it so easy, doing all the work herself. Grandpa did none of that. But he did take the metal tinsel off the tree and reused it year after year. Can you imagine? If you’ve never planned, shopped for, prepared or served a holiday meal—and then cleaned up afterward—you have no idea of the work involved. If you go elsewhere for a holiday meal, be sure to thank the host and perhaps help with the cleanup, too. By the way, a Thanksgiving dinner for 10 people cost $64.05 on average this year, or so says the American Farm Bureau’s annual informal price survey. Who are they kidding? I spent $57 alone for a 19-pound turkey. My suggestion: Let’s make all holidays less about stuff and more about what makes them truly special—time with friends and family. Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles. [xyz-ihs snippet="Donate"]

IT TOOK MONEY TO resolve my recent health issue—on the surface, a lot of money. But figuring out what it really cost is difficult. Actually, I found it impossible. Still, being a health benefits nerd, I couldn’t resist looking at the claims processed by Medicare and my Medigap insurance. Trying to understand billed charges, allowable charges and the resulting payments is daunting. I’m guessing most patients wouldn’t even try. Why should they? My surgery was in the outpatient department but required an overnight stay. I walked into the hospital at 11:30 a.m. on day one and was out at 11 a.m. on the second day. The hospital billed Medicare $43,294, which covered scores of services, each billed separately. Medicare approved the entire amount. Pharmacy costs totaled $936.71, which is a lot of drugs. The only non-intravenous drugs I had were Tylenol and one Oxycodone. I can attest to how good the latter makes you feel. My favorite individual service charge was $109 for “insertion of needle into vein for collection of blood sample”—twice. Each collection resulted in seven separate billings for different blood tests, at a total cost of $1,567.10. Interestingly, the same tests were done two days in a row. Could my blood cell count change in 12 hours? Not being a doctor, who knows? Pathology was $900. The operating room charge was a whopping $20,000. I’m thinking the robot used in the surgery got a piece of that $20,000. Anesthesia was another $5,000. I’m certainly thankful for anesthesia, but the $5,000 wasn’t for the administration of the anesthesia. Instead, the anesthesiologist’s charge was a separate bill. Six assorted injections added another $358.81 to the total. Is all this itemization necessary? Or does it create an incentive to provide more services? Why is it important to know, for example, that an injection of an antibiotic cost $5.08? The Medicare explanation of benefits says it was a drug “requiring detailed coding.” Administrative requirements, it seems, are not limited to private insurance. Now for the really interesting stuff: the doctor’s charges. Back in January, I had several rather unpleasant tests and procedures in the doctor’s office. The first test was billed at $1,737. Medicare’s allowed benefit—in other words, what it paid—was $447.04. Another procedure was $1,275 and Medicare allowed $240.82. The insertion of a catheter was described as “complicated” and billed at $400. Medicare paid $88.76. I’m not sure “complicated” is the right word to describe that procedure. All the services were billed as rendered on a single date, which they weren’t. [xyz-ihs snippet="Mobile-Subscribe"] Here’s another favorite charge in my journey: The anesthesiologist billed $4,482 and Medicare allowed $393.64. How can health care providers survive on such low fees? They don’t. Those reduced payments from Medicare are partly recouped through the fees charged to private-insurance patients and, in the worst case, the uninsured. It’s called cost-shifting. What is a fair and appropriate charge for all this stuff? Who knows? But here’s the thing: I don’t care what it all costs. My out-of-pocket expense for all this health care was just $233, which is my Medicare Part B deductible. Why so little? I pay an additional $240 a month for Medigap supplemental insurance, which covers expenses that Medicare doesn’t. My attitude to health care costs is similar to that of most patients, who are focused solely on getting better. In any case, given that I didn’t see any of these charges until nearly two months after the services were provided, what could I possibly do? It makes you wonder who pays for all this care. The lion’s share of Medicare is covered by a 1.45% payroll tax on all wages, which is levied on both workers and employers, for a 2.9% total. On average, seniors pay premiums of around $400 a month, including premiums for Medicare Part B, Medigap insurance and Part D drug coverage. Those who sign up for Medicare Part D prescription drug coverage may also have additional out-of-pocket expenses, which can be quite substantial, depending on the drug. This is how Medicare works for some 64 million Americans. But what about the larger population? Given the high cost of health insurance and the lack of universal coverage, it’s no wonder many people are seeking a better way. One of the most common recommendations is that we expand Medicare to cover everyone. But as my recent medical procedure suggests, paying for health care raises all kinds of thorny issues: If private-insurance patients effectively subsidize Medicare by paying more, what happens if we move to a system where everybody’s on Medicare? How will hospitals cover costs and what will happen to doctors’ incomes? The hope is that patients will become more attuned to costs and smarter consumers of health care. But how does that happen if patients don’t know what costs they’ve incurred until weeks or months later? How does that happen if everything is covered beyond a small deductible and modest copays—or, in the case of some versions of Medicare for All, there’s no cost to the patient? Compared with what many workers and individuals pay, Medicare is a bargain. Still, seniors pay an average $400 a month in premiums—and, remember, there are also deductibles and copays. Will workers be happy with universal coverage once they understand the full costs they’ll incur, most of which will be in the form of new taxes? Universal coverage will increase demand for health care services, while lowering payment rates to providers. How will health care providers respond? What will happen to the supply of care and the types of care provided? Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles. [xyz-ihs snippet="Donate"]

I RECENTLY READ about a trendy way to lose weight: intermittent fasting. Supposedly there are also health benefits. That got me thinking. I’ve been roundly criticized for bashing the financial independence/retire early movement, otherwise known as FIRE, and for arguing that average Americans spend unnecessarily on all kinds of stuff, thus hampering their long-term financial security. My point of view hasn’t changed. But I’ve found room for compromise: Think of it as periodic financial fasting. I maintain that this strategy can work at virtually all income levels. Alas, it’ll still be an uphill battle to make converts. Surveys show most people would rather cut back spending in retirement than spend less today. No doubt that sounds easy—until you’re retired. At the same time, however, 87% of Americans appear willing to make tradeoffs to catch up on retirement savings. What’s my strategy? Start by tracking every penny you spend over a 30- to 60-day period. Once you have your list, check off each item that isn’t essential spending—and be honest. This exercise will also help you figure out if living paycheck to paycheck is more about your spending than how much you earn. Here’s an idea of what counts as essential spending: food, housing, clothing, transportation, utilities and health care, including those insurance premiums. Everything else is discretionary. That said, there’s also a great deal of wiggle-room within the essential category. A case of soda at the grocery store or leasing a luxury car are questionable for the essential category. Streaming services and premium cable channels are not utilities. Next, decide which of the items on your list you can do without—not forever necessarily, but for a period of time. You may decide to alternate your fasting. For example, give up designer coffee for two months and then give up eating out for the next two months. For many people, that could easily yield a few hundred dollars over a couple of months. When it comes to a big item like vacations, tone it down for a year. Whatever works for you. After you’ve accumulated a pool of savings, it’s time to invest. Building an emergency fund comes first. After that, you need to settle on a retirement strategy. How about a traditional or Roth IRA? At some point, maybe you’ll also open a regular, taxable brokerage account. You can buy a mutual fund from Fidelity Investments or Charles Schwab with as little as $1, but $250 would be a more meaningful start. What if your goal is to buy an individual stock? You might invest once you’ve accumulated $1,000. Using an online broker, you can elect to buy $1,000 worth of a stock and receive whole and fractional shares in your account. My point: You don’t need a fortune to get started. Be sure to reinvest all distributions from your funds and all dividends from your individual stocks. True, when you start out, the sums available for reinvestment will be modest. Don’t be deterred. Growth will come as the process continues. The amount you can save will, of course, depend on your income and the discretionary spending you abstain from. There may be another benefit to all this: You could become addicted to saving and investing. Like the super-rich, you may discover it’s the quest that’s exciting—and you’ll be inspired to keep going and save even more. Don’t be concerned about the stock market’s ups and downs. Every dip in the value of a mutual fund or an individual stock means you can buy more shares through investing and reinvesting. You’re running a marathon, not a 100-yard dash. Like the idea of financial fasting? You might supplement the money from spending cuts with income from a part-time job. Work at it for a few months and build up your initial investment. Even $500 or $1,000 helps. The immediate goal is to get out from under the “I can’t afford to save” mindset. Yes, you can. As Shakespeare put it, “Things won are done, joy’s soul lies in the doing.” Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Getting Catty, Give Until It Hurts and Food for Thought. Follow Dick on Twitter @QuinnsComments. [xyz-ihs snippet="Donate"]