While rumors fly fast and thick on purported damage to Medicare as a result of the Affordable Care Act (health reform), the facts present a different case. Based on information provided by the National Council on Aging, or NCOA, a nonpartisan, nonprofit organization, the following information can help allay some of the fears.
First, the new law will not cut any basic Medicare benefits and in most cases will improve some benefits. For example, more help will be provided with prescription drug costs by gradually closing the dreaded doughnut hole or coverage gap. It also offers better preventive care by allowing free annual wellness visits. Cancer and diabetes screenings no longer will require out-of-pocket charges.
Second, the law will invest in testing new models of care for people with chronic medical conditions such as heart disease, high blood pressure and diabetes so they can receive better care through improved provider coordination and patient-centered services.
Third, the plan will help people access affordable long-term care at home. Each year, millions of older adults are forced to spend down life savings and go into expensive nursing homes because they can’t find or afford care at home. The new plan addresses this by making it easier for individuals on Medicaid to get care in their own homes.
Spouses of people receiving Medicaid home care will not be forced to spend down into poverty before they get help. For people still working, the plan creates a new national insurance program called CLASS to help them pay for long-term care at home. Full- and part-time workers will pay into the program through voluntary payroll deductions.
Within the next 10 years, Medicare spending will continue to grow, but at a slightly slower rate. The Congressional Budget Office has stated that the new law is fully funded and will reduce the deficit by $124 billion within 10 years. It is expected to save Medicare about $500 billion during this same period and is anticipated to extend the solvency of the Medicare Trust Fund for an additional nine years.
This will occur because of several components in the new plan. Specifically, it slows the rate of payment increases to Medicare providers, including hospitals, nursing homes and home health agencies. Doctors will not be affected. Many providers whose profits will increase with newly insured patients already have agreed to these new payments.
It also reduces payments to Medicare Advantage, or MA, plans. About 75 percent of seniors are enrolled in traditional Medicare and the rest are enrolled in private MA insurance plans. Medicare currently pays these plans more than $1,000 more per person than traditional Medicare. The new law eliminates this overpayment. As a result, some MA plans may cut some benefits like eyeglasses or hearing aids, or they may increase premiums or even drop out of the program.
MA plans, however, will not be allowed to cut any guaranteed benefits.
The new plan also asks high-income beneficiaries to pay higher Medicare premiums. This will affect individuals with annual incomes above $85,000 and couples with incomes above $170,000.