Changes to the Affordable Care Act now under consideration may very well have a significant impact on our current Medicare system and, as a result, on the coverage provided. I’ll explain what this may mean to you in a minute, but first, let’s talk about how Medicare began and has evolved over the past 50+ years.
A brief history of Medicare
Medicare was signed into law in 1965 during the Johnson Administration. Originally, it was only for those age 65 or older. In 1972, President Nixon extended Medicare coverage to people with End Stage Renal Disease and to those with disabilities.
Because Medicare, on average, only covers about 80% of health care costs, Medicare Supplemental Plans (also known as Medigap Plans) emerged in the 1990s. In 1997, Medicare + Choice plans (now known as Medicare Advantage Plans or Medicare Part C) came about.
In 2006, under President Bush, Medicare Part D Prescription Drug Coverage was enacted to cover some prescription drug costs. This was designed to be purchased from private health insurers and included a coverage gap (also known as the “Donut Hole”). This means there’s a temporary limit on what the drug plan will cover until one reaches a certain amount, at which point, catastrophic coverage kicks in.
Elements of the ACA you may not be aware of
In 2010, the Affordable Care Act was enacted under President Obama. Much of the press was focused on the expanding insurance coverage, thus increasing access. Indeed, we’ve seen the uninsured rate progress to an all-time low: “The uninsured rate for non-elderly Americans has fallen from about 16.6% in 2013 to 10% in the first quarter of 2016, and 8.6% taking into account seniors who have near universal coverage. ”
What you probably heard less about (and may not realize) is that there were three other elements included in the ACA, all designed to improve the health of Americans. These included:
- Improving quality through innovation
- Enhanced preventive health (thus preventing illness)
- Promoting community and population-based activities
Many of the elements I discussed during the luncheon focused on the first element: improving quality (and reducing cost) through innovation. The ACA forced payment and delivery system changes which were designed to align incentives in the best interests of both health care consumers and providers. As a result, there was a reduction in growth in Medicare payments to hospitals, to other health providers and to Medicare Advantage Plans. At the same time, measurements of quality began to be used to define payment structures.
Money was even designated for Innovation Centers within the Center for Medicare and Medicaid Services (CMS), with the goal of finding alternative ways to improve quality and reduce spending. I’ve experienced some of this work first hand with many of our clients who receive their primary care from practices designated as Patient Centered Medical Homes.
What this means in practice
One excellent example of the ACA’s impact is the creation of incentives for hospitals to reduce preventable readmissions. Prior to the ACA, discharges from hospitals were not well coordinated with the healthcare resources to which patients were transitioned upon discharge. It was not unusual – especially for an older adult who had limited support at home – to be re-admitted within 72 hours of the initial discharge. This was awful for the patient and resulted in much greater cost than if more effort were made in the beginning to coordinate care with lower cost providers (such as home care companies) outside of the inpatient hospital setting.
Another example relates to the closing of the Coverage Gap (Donut Hole) by 2020. Many of our older adult clients take upwards of 20 medications. Because of the way costs are calculated, they can hit the Donut Hole early in the calendar year and have significant out-of-pocket expenses before the catastrophic coverage kicks in later on.
Lastly, the element to include preventive care at no cost to patients just makes great logical sense. It is so much more humane (and less costly) to prevent a catastrophic diagnosis or illness with good preventive care than to treat it once it happens. Prior to the ACA, Medicare had not covered all preventive care.
Here’s what the impact of a repeal would be
I’m astonished by the Congressional Budget Office’s estimate that repeal of the ACA would increase Medicare spending by $802 billion from 2016-2025 by restoring higher payments to healthcare providers and Medicare Advantage Plans. The increased spending would impact healthcare consumers causing higher premiums, deductibles and cost sharing, and would accelerate insolvency of the program. All the effort that has gone into aligning incentives to decrease the cost of care would be eliminated.
Changing the incentive to prevent hospital re-admissions also doesn’t make sense. Lack of coordination of care is continuously cited as a problem in our healthcare system, leading to waste and additional cost. Why halt the forward progress that’s been made on this front?
Finally, eliminating the closing of the Donut Hole will result in healthcare consumers (including older adults on fixed incomes) trying to cut corners by not taking prescribed medications as instructed (or at all), or by purchasing medications from other countries. Even with the progress made toward closing the Donut Hole, prescription drug costs are astronomically high and that still needs to be addressed.
I understand this issue is incredibly controversial, as the ACA has resulted in unintended consequences for some. However, we know that over the past few years, Medicare spending per beneficiary has grown more slowly than private health insurance spending; premiums and cost sharing are lower than they would have been without the ACA; new payment and delivery system reforms are being developed and tested; and the Medicare Part A Trust fund has gained additional years of solvency.
I know we have tremendous work yet to be done. I would prefer we spend our energy on innovative improvements in delivery and quality rather than on repealing and trying to re-create.
I was amazed and touched by the number of people who wrote after last month’s newsletter, expressing concern for my well-being and sharing stories of their own experiences with the condition of shingles. I am deeply appreciative and thank you for writing.
I’m happy to say that although the pain is not completely gone (now ten weeks into this adventure!), it has lessened considerably and continues to improve every day.
If you have not been vaccinated, I want you to know that the shingles vaccine (Zostavax) is approved by the FDA for people age 50 and older (it had been 60). I encourage you to discuss vaccination options with your primary care physician.