Protection and Affordable Care Act

1

MEDICARE

Protection and Affordable Care Act

Medicare

Tanya Staton

ConcordiaUniversity

09-29-13

Abstract

Medicare is a government funded program that provides health coverage to the elderly and some individuals who are on disability. The Medicare program in the United States has four parts: A, B, C and D. This paper will examine Medicare in the past and the present and where the program is headed since the passing of the Affordable Care Act.It will also focus on the expenditures that it takes to run the Medicare beneficiary program. Finally, it will examine if this revision of Medicare will be beneficial to the United States.

In 1965, President Lyndon Johnson signed a bill into law called Medicare under the Social Security Act (Neuman, 2009). Medicare provides healthcare to the elderly and to some individuals that have disabilities. To qualify for Medicare you must be over the age of 65. Along with being 65 you also have to qualify for Social Security (TeitelbaumWilensky, 2013). To qualify for Social Security a person must have worked for at least ten years. There are special occasions where if Medicare requirements are not met, the individual may be enrolled under their spouses’ benefits (TeitelbaumWilensky, 2013). In 1972, Congress decided to expand Medicare beneficiaries. The new expansion allowed a person that has a permanent disability or has end-stage renal disease to also be enrolled as a Medicare beneficiary(Neuman, 2009)..Unlike the elderly, who have to be 65 to qualify for Medicare, an individual who applies due to a disability can be any age (TeitelbaumWilensky, 2013). Medicare covers approximately 45 million people currently over the age of 65 and roughly 7 million beneficiaries that are insured due to some form of disability (Neuman, 2009).. Unlike Medicaid or CHIP (Children’s Health Insurance Program), there is no income cap, so anyone can be eligible no matter their financial situation, although out of Medicare beneficiaries almost 25 percent of them have annual incomes that are below the poverty line in the United States (TeitelbaumWilensky, 2013). Along with being below the poverty line a majority of Medicare beneficiaries are female, part of an ethnic group and are in poor-to-fair health (TeitelbaumWilensky, 2013). Below is a figure showing that from 2002 to 2011 Medicare beneficiaries were 56 percent female.

Medicare is very complex and involves fourparts: A, B, C and D.In Medicare Part A, also known as Hospital Insurance (HI) all beneficiaries are automatically enrolled (TeitelbaumWilensky, 2013). Part A is implemented to cover any charges that may occur for inpatient hospitalized care. Part A will also cover up to 100 days in a nursing home facility, hospice care or home health care (Neuman, 2009).. After 100 days the beneficiary will need to pay out of pocket for continued care. Medicare Part B covers physician’s visits, lab tests and preventive services (TeitelbaumWilensky, 2013). Part B is a supplemental program and is not required, but roughly 95 percent who are enrolled in Medicare Part A are also enrolled in Part B (TeitelbaumWilensky, 2013). Enrollees of Part B usually pay a monthly premium around $100 (med over). Medicare Part C is a plan that provides services that Part A and Part B both provide, but the Medicare beneficiaries receive their benefits through private plans (Neuman, 2009). Medicare Part C is also referred to as Medicare Advantage (TeitelbaumWilensky, 2013). Beneficiaries in the Medicare Advantage Plan usually have around 14 percent more services paid for then a traditional Medicare Plan (Neuman,2009).The Medical Advantage Plan was enacted by congress in 1997 (Neuman, 2009).. Medicare Part D was not enacted until 2006 after the Medicare Modernization Act was created in 2003 (Neuman, 2009). Medicare Part D involves only prescription drugs. Part D is not provided under the traditional Medicare program, but roughly 90 percent of Medicare recipients have drug coverage, and almost half are enrolled in the Medicare Part D drug coverage plan (Neuman, 2009).

Medicare actually accounts for 12 percent of the federal budget, but because of the growing number of Medicare beneficiaries this budget could rise to almost 21 percent (TeitelbaumWilensky, 2013). Medicare expenditures are estimated to rise to almost 1.1 trillion dollars by the year 2023 (kff.org). Increasing costs will also be caused from the development of new technologies and more services that will be needed to sustain the increase in Medicare beneficiaries. Unlike Medicaid and CHIP, Medicare is solely funded by federal government funds from three sources (kff.org). These funds include general tax, payroll tax contributions and beneficiary premiums (kff.org). Below is a pie chart that breaks down Medicare spending into Parts A, B, C and D.

Roughly 86 percent of Medicare Part A is financed through employers and employees who pay a 2.9 percent tax on earnings (kff.org). General revenue finances a majority of Medicare Part B, and beneficiary premiums pay mostly what is left. Medicare Part D is funded mostly by general revenues, and beneficiary premiums and state payments pay the rest (kff.org).

Medicare beneficiaries will rise to almost 79 million by 2030 because of the baby boom generation that will be eligible for the government’s insurance program (medpac.gov). The main problem with the way Medicare is currently set up is that there will not be sufficient funds to continue to provide healthcare to the elderly and disabled due to the rise of beneficiaries. Although the working force is taxed 2.9 percent of their income to provide funding for Medicare beneficiaries this still only accounts for about half of the expenditures needed to fund the program (theweek.com). Medicare Part A deductibles are expected to rise by 50 percent from 2009 to 2018, and the Part D “doughnut hole” is expected to increase by nearly two-thirds (Neuman, 2009). The “doughnut hole” is considered a gap in drug coverage where after the beneficiary reaches a cap they then pay 100 percent for total drug costs until catastrophic coverage is determined (TeitelbaumWilensky, 2013). If Social Security checks do not also increase exceptionally then growing financial problems will also evolve with Medicare beneficiaries, when more health spending is necessary. Medicarehealth reform is a necessity to protect Medicare beneficiaries and future Medicare recipients.

With the Patient Protection and Affordable Care Act currently taking place many adjustments will be made in regards to Medicare. It is estimated that in the next 10 years there will be a reduction of 716 billion dollars in Medicare spending (kff.org).A major change will be in trying to prevent or lessen the “doughnut hole” when it comes to prescription drug coverage in Medicare Part D. The Kaiser family Foundation estimates that 3.4 million Medicare beneficiaries reach their cap and therefore forgo taking medication because they cannot afford the prescriptions (Neuman, 2009). The health reform to Medicare Part D will provide a $250 rebate for any beneficiariesthat fall into the gap. The health reform law will continue to reduce cost-sharing requirements, so by the year 2020 the “doughnut hole” should be eliminated completely. Medicare Part D beneficiaries would only have to pay 25 percent out of pocket until they can qualify for catastrophic prescription drug coverage (Neuman, 2009).The changes to Medicare Part D will also require the states to pay the federal government on any profits that would have been made on prescription drug coverage to dual enrollees. This will mark the first time that states have provided any funding towards Medicare (TeitelbaumWilensky, 2013). The new Medicare health reform will also allow for a free yearly wellness visit, and will allow preventive services like colonoscopies, mammograms, vaccination and multiple other health resources at no cost to the beneficiary (medicare.gov). The Affordable Care Act will also try to provide more resources to physicians to improve care (medicare.gov). The program will also eventually have a listing of doctors on a “Physician Compare” website so patients can decide what healthcare provider best suits their needs. Finally an Independent Payment Advisory Board will be established to monitor funding and to help prevent Medicare fraud. An estimated 70 billion dollars is wasted on fraud and abuse of Medicare services (theweek.com).

Adjustments will also be made to how reimbursement will take place for physicians, hospitals and the Medical Advantage Plans. Currently, the top Medicare beneficiaries spend around $44, 000 annually, while the bottom spenders use only around $3,000 dollars (Neuman, 2009). Medicare is a government funded program that has grown too large to provide the financial support that it once provided. Legislators are trying to figure out a way to bring that spending down. Policy makers are trying to figure out a way to reduce excessive costs due to hospital readmission. The federal government hopes to achieve this by reducing reimbursement rates and also reducing payments for hospital acquired infections. Policy makers are also going to require physicians to make mandatory quality reporting. The new Medicare reform will also try and lower costs for Medical Advantage Plans since these plans are usually anywhere from 9 percent to 13 percent higher than fee-for–service providers (TeitelbaumWilensky, 2013).

It is not only congress that is getting involved in the revision of Medicare; the American Medical Association (AMA) is forming a grassroots campaign to reform the physician payment schedule (ama.org). The AMA and 110 other physician organizations are working on a way to improve Medicare with the upcoming health reform (ama.org). Currently physicians are reimbursed for their services with a formula known as the Sustainable Growth Rate (SGR). The SGR is a way to control spending for physician services (TeitelbaumWilensky, 2013).Physicians actually only account for 16 percent of Medicare spending, but they feel they can lower Medicare spending if they are the ones deciding to choose new models of care for the patients and not what congress is trying to implement (ama.org).

The Affordable Care Act is happening and all aspects of healthcare will be changing from the restructuring of CHIP, Medicaid and Medicare and the federal mandate to have health insurance. The Medicare program is very valuable in the United States. Overall the revisions that are being made to Medicare will be beneficial, but it is not just the elderly and permanently disabledthat will be affected. Physicians, hospitals, pharmacies and other healthcare providers will also be involved along with the working class. It is challenging for the working class to be taxed more to pay into Medicare when the country has such a high unemployment rate.The only way for the reconstruction of Medicare to be successful is if Medicare spending can be reduced in a way that will be beneficial to all.

References:

Teitelbaum, J.B. &Wilensky, S. E. (2013).Essentials of Health Policy and Law, (2ndEdition), Burlington, MA: Jones and Bartlett.

The Official U.S. Government Site for Medicare. (2013). The Affordable Care Act and Medicare. Retrieved from

Kaiser Family Foundation. (2012). Medicare Spending and Financing Fact Sheet. Retrieved from

Chronic Conditions Data Warehouse. (2013). Medicare Enrollment Charts. Retrieved from

The Week. (2011). The Problem with Medicare. Retrieved from

American Medical Association. (2013). AMA launces “Fix Medicare Now” Grassroots Campaign. Retrieved from

Neuman, T. (2009). Medicare 101: The Basics [PowerPoint slides]. Retrieved from

Neuman, T. (2009) Health reform and Medicare: Overview of Key Provisions [PowerPoint slides]. Retrieved from