Jan 6, 2017

Affordable Care Act Repeal May Impact Medicare Benefits

At the top of the GOP agenda is repealing the Affordable Care Act (ACA). We do not yet know what, if anything, would replace it. Several proposals have been put forward, the most detailed one from U.S. Rep. (and Trump's pick for HHS Secretary) Tom Price, the Empowering  Patients First Act, which would provide tax credits to be used to purchase health insurance on the private market. Many Americans are not aware that the Affordable Care Act, aka Obamacare, contains many provisions that are tied to the operation of the Medicare program. Depending on whether the entire law or only Medicare-related provisions are scrapped, repeal could have a significant impact on seniors' Medicare benefits. This is an enormously complex issue, one even the most astute analysts will disagree about. One thing is certain: whether you love or loathe the ACA, it is a contentious political football. 

This post provides you with a very brief outline of the changes in Medicare many experts expect to unfold if there is a total or partial repeal. The points below do not include any consideration of a plan to replace the ACA, since we do not yet know what such a plan would comprise. 

Program Solvency Could be Impacted 

According to the Center on Budget and Policy Priorities, the provisions of the ACA have strengthened and extended the solvency of the hospital portion of the Medicare program. The hospital fund is expected to remain solvent through 2028, 11 years more than was projected prior to the ACA. Read the report here. ACA supporters contend that repealing all of the legislation or the relevant Medicare portions could destabilize the program. 

Medicare A and B Costs Would Increase 

The Affordable Care Act decreased Medicare-related payments to health care providers, including hospitals, home health care providers, nursing homes and other providers. The Congressional Budget Office report estimates that repeal of the ACA would increase federal spending, leading to an increase in Part A deductibles and co-payments and Part B premiums and deductibles. Read the report here.

Medicare Advantage Plans Might be More Expensive - But Might Cover More 

According to a report from the Medicare Payment Advisory Commission Report, the ACA has reduced federal spending on Medicare Advantage Plans. Prior to passage, Washington was paying 14% more to Medicare Advantage Plans than to traditional Medicare for similar beneficiaries. In 2016, the differential was only 2%. Repealing those aspects of the ACA related to Medicare Advantage would likely result in higher Part B premiums for beneficiaries. However, the additional fees would have to be used by Advantage plans to provide additional benefits or to lower enrollment costs.

The Donut Hole Would Not Close 

The so-called donut hole is that period of time when a Medicare beneficiary is responsible for the cost of prescription drugs. The ACA contained provisions to gradually decrease the donut hole. In 2011 the costs were capped at 50%, and are expected to be zero by the year 2020.  The Commonwealth Fund estimates that since 2010, seniors have saved $11.5 billion in reduced prescription drug costs as a result of the closing of the donut hole. Read more at Medicare.gov.

Elimination of Free Preventive Services

The ACA mandates certain free preventive care services for Medicare beneficiaries, including screenings for diabetes, breast cancer, cardiovascular disease and colorectal cancer. According to the Kaiser Family Health Foundation, eliminating this provision would likely raise Part B premiums for beneficiaries.

Higher Income Beneficiaries Could Benefit

The ACA froze the income threshold for Part B premiums tied to income, beginning at $170,000 for a couple and $85,000 for an individual, through 2019. According to the Kaiser Family Health Foundation, repeal of the portion of the law would reduce Part B premiums for higher-income beneficiaries.

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