Seniors' Health: Protecting Medicare, Medicaid Now and in the Future

What does the new health care law do for seniors?

The Patient Protection and Affordable Care Act, signed into law on March 23rd, 2010, puts an end to some of the worst insurance company abuses and levels the playing field to give working families, seniors, and small businesses access to the kind of stable, quality, affordable health coverage that has been out of reach for so many, for far too long.

The law makes health coverage more secure by making sure no more families are denied care due to a pre-existing condition, or lose their coverage or be forced into bankruptcy when someone gets sick. The law includes many important benefits to enhance the quality of seniors’ care, while making things like prescription drugs more affordable.

Here are just a few of the benefits for seniors:

  • New prescription drug discounts and elimination of the “donut hole” coverage gap: 

    Beginning in 2011, any senior who hits the “donut hole” coverage gap will get a 50% discount on brand name Rxs, 7% on generics with those discounts increasing each year until the donut hole is closed in 2020. This has already helped seniors in Pennsylvania save $630 on prescriptions, just in 2011 alone -- and is expected to save the typical senior up to $3000 annually by 2020.

  • New free preventive care benefits: 

    Beginning in 2011, all seniors on Traditional Medicare will receive new benefits, including an annual wellness visit & overall health consultation with your doctor. These new preventive benefits include things like: flu shots, mammograms, and nutrition counseling to better manage chronic conditions, as well as no-cost screenings for cancer, diabetes, and other chronic diseases. These new benefits have already helped over 2 million seniors in Pennsylvania!

  • Lower Medicare Part B Premiums: 

    Because the Affordable Care Act has been effective in improving Medicare efficiencies and reducing costs, the Medicare Part B premium for 2012 was lower than projected -- $99.90, In addition, the Part B annual deductible decreased by $22 to $140, the first time in Medicare's history when the deductible was lower. These developments, along with the 3.6% Social Security cost-of-living adjustment, means that the average retiree received a nearly $40 per month increase in their Social Security checks in January 2012.

  • New investments to increase the number of primary care physicians: 

    The law provides bonus payments to primary care doctors accepting Medicare patients, and to those practicing in shortage areas.

  • New measures to crack down on waste, fraud & abuse: 

    The law provides for new resources and tools to protect taxpayer dollars by preventing fraud in Medicare and Medicaid, building on the efforts of the Department of Health and Human Services and the Justice Department, which have already generated significant savings for taxpayers. 

    The Health Care Fraud Prevention & Enforcement Action Team (HEAT) was created by President Obama in 2009 to prevent waste, fraud and abuse in Medicare. Also, the Medicare Fraud Strike Force teams were expanded - the teams were in seven cities and imprisoned 146 individuals and racked up 140 indictments against 284 defendants who illegally billed Medicare for almost $600 million in fraudulent payments.

    Nearly $4.1 billion was recovered in Fiscal Year 2011 from individuals and companies seeking fraudulent payments from Medicare and Medicaid. 

    These new anti-fraud efforts include tougher penalties for people who steal from Medicare and more law enforcement to find criminals abusing the law and beneficiaries. 

  • New savings that help extend the life of Medicare an additional 8 years! 

    By reducing unnecessary and system-draining overpayments to private insurance companies offering supplemental (Medicare Advantage) plans, and cracking down on waste, fraud and abuse, the law saves billions of dollars that are reinvested to extend the solvency of Medicare another 8 years, until 2024.

Looking at current proposals -- how will they effect quality, affordability and access to care with Medicare and Medicaid?

The Budget Plan to End Medicare & Medicaid As We Know Them:

One the proposals currently being discussed in Congress, called the Ryan Budget, named for its primary sponsor in the US House, Rep. Paul Ryan (R-WI) has us and other health advocates and senior associations very concerned. 

This plan would, literally, end Medicare and Medicaid as we’ve come to know and receive benefits from them. That’s not hyperbole -- here’s what the plan would do:

MEDICARE

House Budget Committee Chairman Paul Ryan's (R-WI) Budget Resolution for Fiscal Year 2013, H.Con.Res.112, which was approved by the House of Representatives on March 29, would destroy the Medicare program and dramatically increase health care costs for America 's seniors, especially future retirees. Chairman Ryan's plan privatizes Medicare and achieves savings by shifting costs to Medicare beneficiaries.

Ryan Budget Ends Medicare As We Know It by Changing It From a Guaranteed Benefit to a Private Insurance Plan

Under the Ryan Budget, seniors would no longer enroll in Medicare as a guaranteed benefit program. Instead (starting 10 years from now, in 2023), when you’d become eligible for Medicare, you would receive what’s essentially a coupon or voucher, to be used to go out and buy private health insurance or traditional Medicare through a Medicare Exchange.

The amount of the voucher would be determined each year, but experts predict it won’t be enough to keep up with the rising costs of private health insurance. And if you choose a plan that costs more than the coupon allowed, you would be stuck with the bill. 

The plan also caps Medicare spending as a percentage, which would:

  • Cut Medicare’s payment for beneficiaries born after 1957 by 23% within seven years of taking effect; that is equivalent to a one-year cut of $130 billion in today’s program, or more than $2,800 for an average beneficiary. 

  • Cut deeper into Medicare in future years, making a 34% cut in 17 years (equivalent to more than a $4,000 cut for an average beneficiary today) and a 42% cut in 27 years (the equivalent of more than a $5,000 cut for an average beneficiary today).

Raising the Eligibility Age

In addition to privatizing Medicare, the Ryan Budget would increase the age of eligibility for Medicare from 65 to 67 by increasing it two months per year from 2023 to 2034. 

Repealing Key Protections and Affordability Measures in the Affordable Care Act

The Ryan budget also repeals important protections in the Affordable Care Act that make insurance available and more affordable for 65 to 67 year olds -- like the requirements that insurers stop denying coverage to people with pre-existing conditions, stop charging women more than men and limit how much more they charge people who are older or people who’ve gotten sick in the past. Without the guarantees in the ACA, such as requiring insurance companies to cover people with pre-existing medical conditions and to limit age rating, it would be very difficult and expensive for older people who would no longer be eligible for Medicare coverage to purchase private insurance.

Repealing the Affordable Care Act would re-open and make permanent the Medicare prescription drug “donut hole,” which would increase costs by up to $6,000 annually per beneficiary by 2020, affecting 3.8 million seniors.

It would also take away new free preventive care services available under the Affordable Care Act.

Overall, the plan will effect everyone who depends on Medicare, as it: 

  • Undermines the traditional Medicare program by encouraging younger, healthier people to join private plans, leaving traditional Medicare with older, sicker, and more costly patients. 

  • Increases seniors’ health care costs by relying on private insurance plans that use premium dollars to pay for marketing, advertising, and lobbying instead of health care. Increases seniors’ out-of-pocket costs as new vouchers don’t keep up with rising health care costs, leaving seniors to foot the bill or forgo needed care. 

  • Leaves low-income beneficiaries without adequate protections against high out-of-pocket costs due to a shrinking Medicaid program.

  • Leaves many 65-and 66-year-olds without other options for coverage.

MEDICAID

The Ryan Budget also ends Medicaid as we know it by changing the program from one that can adapt to the need of patients and states, to one that is inflexible - a block grant, where states receive a fixed amount of money to care for our most vulnerable citizens (young children, seniors needing long-term care, and the unemployed). 

Medicaid is currently structured as a partnership between states and the federal government and is designed to provide more help when states need it most. Changing this system that has worked so well for decades is a dangerous proposition that would shift costs to patients and health care providers and leave state taxpayers at risk of facing huge burdens in the event of another recession or other event that would expand the need for coverage. The federal government would no longer be a partner to states in responding to such challenges - we would have a set amount of money, and when that runs out - tough choices to make about how to continue caring for those in need.

The Ryan Budget ends Medicaid as we know it by turning it into a capped, block grant program and drastically cutting funding:

  • The plan cuts a total of $1.74 trillion from Medicaid over the next 10 years by:
  • Cutting $810 billion from the existing Medicaid program over the next 10 years, which is a one-third reduction in federal support to the program by 2022

  • Repealing the Medicaid expansion in the Affordable Care Act, which would cut an additional $932 billion from Medicaid over the next 10 years

  • If enacted, Pennsylvania would lose up to $37 Billion over the next ten years in federal Medicaid funding -- these cuts would effect nursing homes, health care providers, local economies, patients, families and state taxpayers.

The Ryan Budget’s Medicaid cuts would have a drastic impact on Pennsylvania seniors:

In Pennsylvania, nursing home care costs an average of $90,500 a year. Over 60% of nursing home patients in our state rely on Medicaid to help pay these costs that Medicare doesn’t cover. Many people who need long-term care exhaust their savings to the point that they become eligible for Medicaid. 

For 247,000 seniors and 570,600 people with disabilities in Pennsylvania, Medicaid is a critical source of coverage for long-term care. 

Medicaid doesn’t just pay for long-term care in nursing facilities. It also pays for home health care -- in fact, in Pennsylvania, over one third (34%) of Medicaid dollars go to pay for care that’s provided in-home.

Nearly 158,000 direct care workers (home health aides, nursing aides, and personal care attendants) provide care to Pennsylvanians who need long-term services. To meet the demands of its aging population, by 2016, Pennsylvania will need to expand its workforce by 25%.

Since Medicaid is a critical source of payment for Pennsylvania’s long-term care workers, cuts to Medicaid could mean cuts in payments to providers, including long-term care workers. That could result in salary reductions or reductions in the number of workers, which could, in turn, affect the quality of care and the availability of workers for all Pennsylvanians who need long-term care. A strong Medicaid program with adequate payment for care providers is essential to helping Pennsylvania build a workforce that can meet the long-term care needs of all its residents, whether they have Medicaid or not.

If lawmakers pass the Ryan Budget, Pennsylvania workers, families and seniors will see steep cuts to health care and the loss of private sector jobs:

  • Jobs Lost: An Economic Policy Institute analysis in 2012 found that the $544 billion in Medicaid cuts proposed in the Ryan budget over the next five years would result in 37,200 Pennsylvania jobs lost in 2014 with the loss climbing each year and peaking in 2017 at 63,600 jobs. Overall, Pennsylvania would lose 214,527 jobs between 2013 and 2017 under the Ryan Budget, with health care and long-term care workers bearing the brunt of the cuts. 

  • Private Sector Harmed: The analysis above also reveals that 96 percent of Medicaid payments go to providers in the private sector. Nationally, the Ryan Budget cuts will result in the loss of more than 823,000 private-sector jobs in 2014, and annual job losses would top 1.4 million private-sector jobs in 2017.

  • Tax Hike on Middle-Class Families: A Families USA report shows that Pennsylvania alone would lose $37 billion in Medicaid funding over the next ten years AND lose another $33 billion in new tax credits for working and middle-class families brought by the Affordable Care Act to make health insurance affordable (the Ryan Budget repeals the law and strips the tax credits and protections). 

  • Seniors Forced to Pay More for Prescriptions: The 243,500 Pennsylvania seniors in the “donut hole” coverage gap who have already saved, on average, $660 per person thanks to new prescription drug discounts in the Affordable Care Act would go back to facing huge out-of-pocket costs under the Ryan Budget. 

  • Patient Care Jeopardized: In Pennsylvania alone, 818,000 seniors and people with disabilities rely on Medicaid to maintain their health and live with dignity. In Pennsylvania, nursing home costs average $90,500 a year, and 62.2 percent of Pennsylvania’s nursing home residents rely on Medicaid to pay for their nursing home care. Cutting Medicaid funding will force providers reduce staffing, spend less time with patients and find other ways to to cut corners. 

Sources: Kaiser Family Foundation, Families USA, National Committee to Preserve Social Security and Medicare, US House Energy and Commerce Committee, Congressional Budget Office