During the debate over health care reform, changes to Medicare became a major point of contention. Seniors packed town hall meetings and contacted elected officials in droves to make sure their benefits would be protected.
Opponents of health care reform charged that it would gut Medicare; supporters said reform would strengthen it for years to come. No wonder that a CBS News poll conducted the day that health care reform passed the House, 54 percent of Americans admitted they were confused by the law.
Now that the dust has settled, what does health care reform mean to Medicare beneficiaries now and in the future? Not as much as you might think from all the hype, says David Certner, legislative policy director for AARP in Washington D.C.
"A lot of people hear about the significant savings in the bill and are afraid of how that's going to impact their benefits," says Certner. "But there are no changes to Medicare's guaranteed benefits in this bill."
From 'doughnut' to Danish?
In fact, the law contains several new benefits for seniors that are worth noting. The biggest is the closing of the Medicare Part D "doughnut hole," the name given to the gap in drug coverage that occurs after a beneficiary reaches the initial limit but before he hits the catastrophic threshold several thousand, out-of-pocket dollars later. The doughnut hole isn't just a financial headache for those affected, it's a public health hazard, says Stuart Guterman, assistant vice president for payment system reform program at The Commonwealth Fund, a health care research foundation based in New York.
"The concern is that during this coverage gap, people with chronic conditions are cutting back on their use of the drugs they need to manage those conditions, and that puts them at risk," says Guterman.
The new law begins closing the doughnut hole this year by sending any beneficiary who hits the initial limit a $250 rebate check. Starting in 2011, the doughnut hole shrinks further as a drug discount program chops 50 percent off the cost of name-brand prescription drugs and additional subsidies kick in to reduce the amount seniors pay out of pocket for generic drugs.
By 2013, subsidies become available for prescription drugs as well and increase over subsequent years to completely fill the doughnut hole by 2020, ensuring that Medicare beneficiaries never pay more than 25 percent of drug costs out of pocket.
Another big benefit for Medicare recipients is an end to co-payments for many kinds of preventive care in 2011. Previously, beneficiaries had to pay an annual deductible for physician services plus 20 percent of the cost of each service, says Guterman.
However, under the new law, "things like immunizations, cancer screenings and colonoscopies will no longer have a co-payment," says Certner.
You can find a more complete list of the preventive services covered by visiting the Department of Health and Human Services Preventative Services Task Force Website.
Medicare patients will have the option of going to their primary care physician for an annual "wellness visit," a checkup completely covered by Medicare and intended to aid in the early detection of diseases, says Guterman.
Medicare Advantage less advantageous
Millions of seniors are enrolled in Medicare Advantage, an offshoot of Medicare that allows individuals to channel their Medicare benefits toward buying private health insurance.
And while Medicare patients may have reason to celebrate, those enrolled in Medicare Advantage plans may lose some benefits, such as free Medigap coverage and vision plans, starting in 2011, says Certner.
"Because of the large subsidies we were giving these plans, that factored into the kinds of additional packages and benefits (Medicare Advantage providers) were able to offer people," says Certner. "The problem was, these were very expensive benefits and they weren't just being paid for by the taxpayers. Anyone not in a (Medicare Advantage) plan, which is the bulk of beneficiaries, was paying a much higher premium because of this."
A 2008 study by The Commonwealth Fund found that Medicare was paying an average of 12.4 percent more for each Medicare Advantage enrollee than for those enrolled in a traditional Medicare plan. The new law strips out these overpayments which will likely lead to cutbacks in the frills that Medicare Advantage plans offer to entice new patients to sign up, says Certner.
Still, by law, Medicare Advantage plans can never offer less coverage than plain-vanilla Medicare, so there's no need for Medicare Advantage patients to worry that their plan will strip out essential services. Stronger Medicare Advantage plans will actually receive efficiency and performance bonuses from the federal government that will alleviate some of this shortfall. In the end, this may help weed out some of the weaker, less effective Medicare Advantage providers that may not have been passing along the additional government subsidies to consumers, says Guterman.
And while the new law does much to shore up the long-term solvency of the Medicare fund, Guterman says it fails to address one key issue that may hurt the program in the long term: doctor reimbursement. The law fails to repair the recurring problem of the Medicare Sustainable Growth Rate, a flawed federal formula that automatically sets Medicare payments unrealistically low based on economic indicators and previous years' costs rather than real-world medical costs.
"There's always the worry that (failing to fix the problem) might harm access to care for Medicare beneficiaries" if doctors decide that treating Medicare patients doesn't make business sense, says Guterman. With the health care reform debate over for the time being, it's doubtful that Congress will take up a permanent fix for this issue any time soon.
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