As the election heats up, Medicare is quickly becoming as important an issue as the Patient Protection and Affordable Care Act itself.
Though Medicare reform was not the primary intent of the PPACA, the legislation does depend on massive funding changes to Medicare in order to pay for itself. As we head into November, we can expect the current administration to defend those changes while the GOP ticket will be presenting its own solutions.
First let's take a look at some of the major changes that have affected Medicare already under health reform already:
- Increases in Medicare Part B and D premiums for higher income Medicare beneficiaries
- Improvement in Part D coverage that began in 2011. Beneficiaries now receive a 50 percent discount on their brand name medications during the Part D coverage gap, and discounts on generic medications as well. These savings under the PPACA will grow gradually over the next decade so that by 2020, the administration hopes to see the Part D coverage gap entirely closed.
- Annual routine preventive care was also strengthened by the PPACA, whereas Medicare previously only provided a one-time physical upon initial entry into Medicare. Preventive services also now require no cost-sharing by the beneficiary.
These changes—while welcomed by current Medicare beneficiaries—come at a high price tag. According to the Congressional Budget Office, Obamacare will reduce the growth of Medicare spending by over $500 billion over 10 years even as baby boomers age into Medicare at record rates. The specific items which make up the major part of this reduced spending growth are:
- Reductions in the scheduled annual increases in payments to Medicare healthcare providers, including physicians, hospitals and skilled nursing facilities.
- Reductions in payments to Medicare Advantage plans overall, but including reform which will allow for the plans to achieve bonuses if they receive high ratings for the quality of care provided.
- A new Independent Payment Advisory Panel is created whose responsibility will be to recommend reductions in Medicare spending to keep spending below specified targets
- Increases the Medicare Part A tax from 1.45 percent to 2.35 percent on earnings over $200K for individuals and $250K for couples, beginning in 2013.
Cuts and concerns
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