The Affordable Care Act and Medicare Part VII: Shifting Costs

[TexasTowelie]

By Dr. Brian Carr
President, Behavioral Health Associates, Lubbock, Texas, 1991-Present
Chairman, City of Lubbock Board of Health, 2013
Submitted on September 10, 2013 - 8:15am

Closing the “donut hole”

Medicare recipients typically pay a deductible of a few hundred dollars and then 25 percent of the cost of the drugs they need up to a certain point (typically around $2,800 in a person’s drug spending). At that point the recipients have to pay 100 percent of the cost of their drugs up until they reach $6,400 in drug spending. Beyond that amount, insurance coverage kicks in again to close the hole with the recipient paying only 5 percent of drug costs above $6,400.

This is reduced so that by 2020 so that the Medicare recipient will only have to cover 25 percent of the medication cost.

Lower-subsidies for high income recipients

Specifically, individuals with an income of $85,000 or higher and couples with an income of $170,000 or higher will receive a reduced subsidy that will increase the price they pay for their prescriptions.

Medicare spending cuts

Roughly 42 percent of the total 1 trillion dollar cost of the ACA will come from cuts in Medicare spending over the next decade.

The biggest cuts in Medicare will come in two main areas: a reduction in payment rates to providers and a reduction in payment rates to Medicare Advantage plans.

About one-fifth of the funding for the ACA (about 196 billion) will come from cuts to Medicare’s payment rates to providers other than physicians over the next 10 years. These cuts will impact hospitals, skilled nursing facilities, and home-health agencies.

The AARP has a factsheet for a review of changes under the ACA for people over 65. They also have a series of other publications. The Law and Medicare

• Closing the Medicare Part D Coverage Gap Read | (PDF)

• The Health Care Law and Medicare Read | (PDF)

• The Health Care Law and Medicare Part D Savings Read | (PDF)

• The Health Care Law and Medicare Advantage Read | (PDF)

• Protecting Against Health Care Scams Read | (PDF)

Medicare Advantage cuts

About one in four enrollees in Medicare are also enrolled in the Medicare Advantage Program. Medicare Advantage programs open up Medicare to private insurers like Cigna and Aetna as managed health care plans. Since their inception however the plans have tended to have unacceptably low “medical loss ratio” which suggested that private insurers were making excessive profits at the expense of taxpayers.

The private insurers that remain in the program will likely cut benefits and/or raise premiums.

Independent Payment Advisory Board (IPAB)

To be established as a means to reduce healthcare costs in Medicare. Modeled on the U.S. Federal Reserve System for banking the IPAB consists of a panel of 15 Appointees handpicked by the president and approved by the Senate. They will be asked to make cost cutting recommendations for Medicare whenever spending per person in the program rises faster than the Consumer Price Index.

It will be able to make binding recommendations starting in 2015 with none implemented until 2018.

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http://lubbockonline.com/interact/blog-post/dr-brian-carr/2013-09-10/affordable-care-act-and-medicare-part-vi-shifting-costs

Cross-posted in Texas Group.

[font color=green]This is actually the seventh installment provided by Dr. Carr although the headline in the Lubbock Avalanche-Journal shows Part VI. [/font]