How Do the Affordable Care Act and Medicare Work Together?

Despite its short life thus far, the Affordable Care Act (ACA) of 2010 has already affected just about every area of American healthcare you can name—and Medicare is no exception.

About-the-Affordable-Care-Act-Tax-Daniel-Stoica-Accounting-Professional1While some ACA-mandated changes to Medicare have already been introduced, more changes are on the way. If the Affordable Care Act in its current form remains the law of the land, ACA-mandated changes will affect Original Medicare, Medicare Advantage, and Medicare Part D.

The 2013 Medicare Trustees Report states (on page 2) that the Affordable Care Act “contains roughly 165 provisions affecting the Medicare program by reducing costs, increasing revenues, improving benefits, combating fraud and abuse, and initiating a major program of research and development to identify alternative provider payment mechanisms, health care delivery systems, and other changes intended to improve the quality of health care and reduce costs.”

Don’t worry—we’re not going to point out or explain those 165 provisions here. Fortunately, we can boil most of them down to a few points that illustrate how the Affordable Care Act and Medicare go together.

  1. Remember that the Health Insurance Marketplace does not concern Medicare.  Medicare plans are not available through Obamacare Open Enrollment or the healthcare exchange. The exchange is only for people who are currently uninsured. Since Medicare recipients have Medicare coverage, the exchange does not apply to them in any way. Obamacare penalties should be of no concern to anyone eligible for Medicare. However, people on Medicare should not overlook the Oct. 15-Dec. 7 Medicare Open Enrollment Period. Medicare Open Enrollment has nothing to do with the Affordable Care Act, and it’s unfortunate that a lot of people seem confused this fall because two major healthcare enrollment periods are taking place at the same time.
  2. The Affordable Care Act has improved Medicare preventive services.  The American Public Health Association (APHA) states, “Today, seven in ten deaths in the U.S. are related to preventable diseases such as obesity, diabetes, high blood pressure, heart disease, and cancer, and 75 percent of our health care dollars are spent treating such diseases. However, only three cents of each health care dollar spent in the US go toward prevention.” The ACA reflects this outlook, emphasizing the importance of preventive care. As a result, millions of Medicare users have received free preventive health services, such as mammograms and colonoscopies, since the ACA came into effect. Medicare annual “wellness” visits are also available at no cost. For Medicare preventive services requiring coinsurance or copayments, Medicare supplement plans help eliminate out-of-pocket costs.
  3. The ACA is helping to lower drug costs for people on Medicare. The coverage gap or “donut hole” phase of Medicare Part D prescription drug coverage has been a serious problem for many people. In short, the donut hole has represented a lengthy period during which Part D enrollees had to pay their drug costs out-of-pocket. The Affordable Care Act requires drug companies to offer discounts on covered brand-name and generic drugs during the donut hole phase. According to the Medicare.gov publication, Closing the Coverage Gap, the result is that individuals now pay only 47.5 percent of the cost of covered brand-name drugs and 79 percent of the cost of generic drugs during the donut hole phase, which is scheduled to be eliminated by 2020.
  4. The ACA imposes limited payment cuts and restrictions on Medicare Advantage plans.  As the National Council on Aging explains, in 2010—the year the Affordable Care Act was passed—“private insurance companies running Medicare Advantage (MA) plans were paid about $1,100 more per person than what was paid for people in original Medicare. As a result of health care reform, starting in 2012 payment rates to MA plans were gradually reduced in many parts of the country, so they are about the same as rates under original Medicare.” One obvious result is that some Medicare Advantage plans are raising premiums and cutting coverage that is not required—which only underscores the importance of investigating all your Medicare Open Enrollment options this year and every year. The ACA also places new limits on what Medicare Advantage plans are permitted to spend on administration, marketing, and other costs not directly related to medical services.
  5. The ACA makes it easier for people qualifying for nursing home care under Medicare Part A to compare nursing home options.  Subtitle B of Title VI of the ACA aims to improve “transparency of information” in the nursing home industry so that older Americans can learn important details about individual nursing homes, such as their administrative costs, the amount of direct care residents receive, and any complaints filed against the facilities. The ACA also calls for establishment of a government Nursing Home Compare Medicare Website designed to make it easy for consumers to compare nursing homes and to find suitable nursing home options.
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We can summarize the relationship between the ACA and Medicare more fully by saying the ACA aims at giving small doses of help to Medicare consumers while slowing Medicare’s rate of growth to more sustainable levels. Unfortunately, ACA provisions aimed at reining in private companies sometimes hurt people on Medicare, but supporters of the Affordable Care Act are quick to point out that the ACA—imperfect as it may be—plays a key role in improving the solvency and extending the life of the Medicare program.

Has the ACA had an impact on your experience with Medicare? Please let us know!

© 2013 MedicareMall.com

 

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