Diving Deep: What Obamacare Got Right and What It Got Wrong
How It Affects Your Medicare, Your Grandkids, and Your Bottom Line
It’s been a while, but many folks are still confused: What is Obamacare and how does it matter to Medicare beneficiaries? If you’re wondering this, you’re not alone.
According to Northwestern Mutual, 45% of surveyed seniors say health care costs are the number one concern and barrier to achieving financial stability during their retirement years. With nearly half of seniors feeling the strain of health care costs on their limited budgets, it’s no wonder there is concern about the Affordable Care Act and how it affects us in our golden years.
Like it or not, President Obama enacted this historic, sweeping law that changed health care as we know it – for better or for worse – and the changes are still coming, especially for Medicare enrollees.
We’re not here to bore you with politics. We’re here to set the facts straight and answer your toughest questions.
First things first: let’s talk about your grandkids. You love them, you care for them, their generation is the reason you even pay attention to this kind of stuff. And the Obamacare law, also known as the Affordable Care Act, probably affects them a lot more than it does you.
In the 10,535 pages of regulations in the law, there are a lot more changes that affect people under age 65 than affect Medicare recipients. The bottom line is, overall, the Obamacare law has helped make healthcare more affordable and accessible to younger generations who are experiencing the highest unemployment and underemployment rates we’ve seen in years.
First, The Bad News…
While Obamacare had much more of an impact on non-Medicare plans, it has also affected the Medicare market. The Affordable Care Act will remove $716 billion from Medicare Advantage by the year 2022. That’s no chump change!
- Medicare Advantage (also known as MA or MAPD) will feel this strain since MAPD insurance companies will receive less reimbursement per member than they do currently, therefore resulting in insurance companies paying doctors less for the services they provide. Some feel the lower reimbursement for providers may result in delays and a decreases in quality of care.
- So if MA and MAPD insurance companies are going to receive less money for providing services, where is that $716 billion going? Most Medicare Advantage plans include prescription drug coverage and are called MAPD plans. The insurance companies that administer MA and MAPD plans will now receive less reimbursement per insured person. The money is not being removed from Medicare completely; rather it is being routed from Medicare Advantage into Medicare Prescription Drugs plans and some other areas.
- The new money in the Part D budget is being used to close the Part D Coverage Gap, also known as the Donut Hole, by the year 2020. (In our opinion, this is bad for MA and MAPD enrollees…but good for enrollees who have Medicare Supplement plans with Part D coverage!)
- Some insurance companies have stopped offering certain insurance products in chosen areas. Less competition may translate into higher premiums.
- Also, insurance plans and providers who do not “keep clients healthy” (statistically, at least) by keeping them out of the hospital will be paid less. Again, this leads some folks to assume that lower payments to providers may mean less quality of care.
- Higher-income businesses and individuals earning over $250k and $200k respectively will have to pay more Part A taxes which will help subsidize the closing of the donut hole.
- The ACA also instituted a mandate that everyone must have health insurance. If a person does not have health insurance which provides “minimum essential coverage” they may be subject to penalties. Minimum essential coverage includes, but is not limited to, hospitalization, emergency room services, outpatient care, and preventive services. Medicare Part A satisfies this requirement on its own, but Part B alone does not. This means that if someone only has Medicare Part B, they could face penalties.
….And Now The Good News
You’re probably wondering where that $716 billion being cut from MAPD is going. That money is being “reinvested” to:
- Improve the quality of care provided by Medicare doctors and hospitals: Providers who frequently prescribe potentially-harmful medications (like pain pills) or whose patients are regularly re-admitted to the hospital will receive less – or no – reimbursement from Medicare. The law requires that programs be created to provide ongoing training to providers and hospitals to ensure providers keep patients healthy and to reduce health care fraud and abuse. The programs have already helped avoid hundreds of thousands of deaths, hospital readmissions, and initial hospitalizations. Also, it includes a 1% penalty for hospitals who do not provide quality care, or a 1% reward for the hospitals that do provide quality care to patients.
- Create “star ratings” for MAPD and Part D drug plans: Similar to restaurant reviews, these easy to understand star ratings allow the public to see at a glance how individual plans compare. The plans are graded based on keeping enrollees healthy, enrollees’ satisfaction with the plan, customer service, covered screenings and tests, ability to manage chronic conditions, drug safety and pricing, and other factors.
- Help to close the Part D donut hole: We’ve all heard of the dreaded Medicare drug Coverage Gap, also known as the Donut Hole. A majority of the $716 billion cut in funding is being reinvested in Part D. In simple terms, the Obamacare law will ensure that the donut hole is drastically reduced by the year 2020! Enrollees will only pay 25% of costs of generic and brand-name prescription drugs starting in year 2020 (down from the 58% and 45% you pay, respectively, in 2016’s coverage gap). Even though eight out of ten Medicare beneficiaries never reach the donut hole, this will surely save money for those who do.
- Cover many preventive screenings and services at no cost to you: Medicare beneficiaries may now take advantage of many preventive tests and screenings – at no cost to them. This includes, but is not limited to, mammograms, some cancer screenings, and smoking cessation counseling.
- Establish a Maximum Out Of Pocket (MOOP): This limits the maximum costs a consumer would have to pay r under their plan in any given year. However, there is no longer a limit that the insurance company will have to pay in any given plan year; these used to be called “lifetime limits” and restricted the insurance companies’ out of pocket costs. Think of MOOP as the opposite of lifetime limits: MOOPs reduce the consumer’s financial risks, while lifetime limits reduce the insurance companies’ financial risks.
The Bottom Line
The bottom line for most of us is cost: how does this new, big law change my Medicare premiums and bills? Well, that depends on who you ask…
Some predict that over time, the Obamacare law may actually decrease Medicare out of pocket costs for Seniors because doctors and hospitals are being encouraged to operate more
efficiently. Part B premiums are determined by law that was enacted before Obamacare and was not changed by the new legislation, and therefore Part B premiums are not affected by Obamacare.
Others, as I noted earlier, predict that Obamacare will cause healthcare costs to skyrocket over time. They also worry that more and more providers will stop practicing health care due to more restrictions.
Like most laws, there are some good things and some bad things regarding how the Affordable Care Act affects seniors and younger people alike.
Only time will tell how the law fully unfolds, but for now, don’t let Obamacare scare you away from finding a better solution to your health care needs! Remember, 45% of seniors in a recent poll by Northwestern Mutual say that the main hurdle they face in their financial security is the rising costs of health care. It’s more important than ever that seniors get all the relevant facts before making a Medicare decision today that could significantly impact their entire retirement.
We’re always here to help answer all questions related to Medicare and even have in-house Obamacare experts – and our help is always at no cost to you. Call one of our licensed Medicare Agents to get answers to your toughest questions. See why so many Medicare beneficiaries trust My Medicare Partners with their health care needs.