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Last week, two separate, but related, events in Washington added to the threats facing the Medicare program.  First, the Supreme Court heard oral arguments in a case challenging the constitutionality of the Affordable Care Act (ACA), otherwise known as Health Care Reform.  An adverse decision would potentially roll back Medicare improvements that have already begun. Second, the House Republicans, led by Rep. Paul Ryan, recently passed a budget that would:

  • Repeal ACA;
  • Continue Republican efforts to transform the Medicare program into a capped voucher system; and
  • Shift massive health care costs to older and disabled Medicare beneficiaries. 

Impact if ACA is Found Unconstitutional

In our last two Alerts, the Center has discussed the Supreme Court's review of challenges to ACA and offered our views about what would be at stake if the act is struck down.[1]  In addition to the concerns raised in those Alerts, striking down ACA would mean that persons using the Medicare Part D prescription drug program will experience additional costs because the Donut Hole gap in coverage, during which applicable beneficiaries pay 100% of their drug costs, would continue.  Beneficiaries will also pay higher co-payments for many preventive services, while programmatic savings achieved by reigning in overpayments to Medicare Advantage plans will be lost, and current and future gains to the provision of health coverage and care would be lost, including for children with pre-existing conditions.[2]

Impact of the Ryan/Republican Budget

On March 29, 2012, the House of Representatives passed the 2013 budget plan proposed by Budget Committee chairman, Rep. Paul Ryan (R-WI).  This plan makes dramatic changes to the Medicare program and to the entire federal budget.[3]  As noted by Robert Greenstein, President of the Center on Budget and Policy Priorities (CBPP), the Ryan Budget:

[i]s Robin Hood in reverse — on steroids. It would likely produce the largest redistribution of income from the bottom to the top in modern U.S. history and likely increase poverty and inequality more than any other budget in recent times (and possibly in the nation's history).[4]

The Ryan budget would transform Medicare from a community of people guaranteed the same standard benefits into a voucher program in which each individual would be required to attempt to find adequate coverage.  Beneficiaries would incur more out-of-pocket health care costs because the proposed vouchers will not be large enough to cover the rising costs of health care.  In addition, the Ryan/Republican budget would also raise the Medicare eligibility age to 67, and likely lead to the demise of the traditional Medicare program by "making its pool of beneficiaries smaller, older, and sicker."[5]

What's at Stake

The following chart illustrates the devastating impact of repealing ACA and of implementing the Ryan/republican budget.[6]

Brief Comparison of Health Reform, House Republican Budget, and Consequences if Health Reform is Repealed or Overturned

 

Current Health care reform (ACA)

House Republican 2013 Budget Plan

repeal of health care reform

Medicare's Guaranteed Benefits

"Nothing in the provisions of, or amendments made by, this Act shall result in a reduction of guaranteed benefits under title XVIII of the Social Security Act [the Medicare title]" Additionally, "Nothing in this Act shall result in the reduction or elimination of any benefits guaranteed by law to participants in Medicare Advantage plans."[7]

Starting in 2023, replaces Medicare's guarantee of coverage with a flat payment (voucher) given to beneficiaries to purchase either private insurance or traditional Medicare.  Beneficiaries would have to pay the difference between the coverage they need and the voucher's worth.

Increases the vulnerability of the Medicare Trust Fund, leading to a corresponding threat to beneficiaries' guaranteed benefits.

Medicare Eligibility

Medicare eligibility is not changed.  Most people are eligible at age 65.

Between 2023 and 2034, the age of eligibility would rise from 65 to 67.  At the same time, it would repeal ACA which →

If Health Care Reform is repealed and the age of eligibility is increased, many people age 65 and 66 would be uninsured.[8]

Medicare Cost-Sharing

Reduces cost-sharing by:

1) Eliminating co-insurance and deductibles for most preventive services;

2) Closing the Part D prescription drug Donut Hole; and

3) Prohibiting Medicare Advantage plans from charging more than traditional Medicare for costly services.[9]

Since the capped growth rate of spending per beneficiary staring in 2023 will likely be less than the growth of actual health care costs, vouchers would purchase less coverage each year, pushing more costs onto beneficiaries.  For example, federal spending on behalf of an average new beneficiary would be up to 42% less in 2050 than under current law.[10] Also, by repealing ACA →

Reinstatescost-sharing for preventive services and reopens the "Donut Hole," ensuring higher out-of-pocket costs. 

Medicare Premiums

Freezes the income level at which beneficiaries with higher incomes pay more for Part B through 2019; requires beneficiaries with higher incomes to pay more for Part D.[11]

Provides voucher to either pay or offset premium of plan chosen by individual (as noted above, voucher amount not expected to keep up with growth in health care costs). Freezes income-related premium thresholds until 25% of Medicare beneficiaries are subject to the increased premium.[12]

Rescinds freeze on income levels for increased premiums.

Fraud, Waste, and Abuse

Targets fraud, waste, and abuse in Medicare by:

1) Eliminating overpayments to Medicare Advantage plans.[13]

2) Implementing stricter screening procedures and billing procedures on Medicare providers and suppliers;

3) Appropriating additional funds[14]

(Unclear)

Eliminates programs that target fraud and abuse, and reinstates wasteful Medicare Advantage overpayments.[15]

Coordination of Care and Improved Quality

Adds specific programs to improve quality of care.  For example: payment reforms; auditing unnecessary hospital admissions and hospital acquired conditions; promoting programs to improve care coordination, particularly for beneficiaries with complex health conditions; improving quality measures and quality reporting.[16]

Unclear; according to the proposal, the cap on growth rate in Medicare spending is intended to "foster the proper incentives for providers and plans to develop more efficient methods of quality care delivery"[17]

Eliminates programs that seek to coordinate care and improve quality for beneficiaries.

Promotion of Health Care Delivery System Reforms

Creates the Center for Medicare & Medicaid Innovations (CMMI) to promote delivery systems that improve care and reduce costs, creates Medical Home and Accountable Care Organization models to improve care for people with multiple chronic conditions.[18]

Unclear, however would repeal ACA which →

Eliminates authority and funding for delivery system innovations, including for CMMI, thereby eliminating opportunities to find solutions to the growth in health care costs.

Protection for People Dually Eligible for Medicare and Medicaid (Dual Eligibles)

Creates the Medicare-Medicaid Coordination Office (MMCO) to improve access to care for dual eligibles;[19] improves access to benchmark Part D drug plans for people eligible for the Part D low-income subsidy.[20]

Dual eligibles would apparently no longer be eligible for supplemental benefits not covered through Medicare.[21]  Turns Medicaid into a block grant program, likely leading to no or less assistance to people with limited incomes and resources, including people who need long-term care.[22] Under the plan, Medicaid would be cut by one-third by 2022 and further after that.[23]

Reverses the creation of critical initiatives to improve access and navigation through the health system for vulnerable dual eligibles.

Deficit Reduction

Reducesdeficit by $1.2 trillion over twenty years. [24]

Projects an estimated $205 billion in Medicare savings over President's budget over ten years.[25]  Notes that "[h]arnessing the power of choice and competition helps tackle the root drivers of health inflation;" (which has not worked with Medicare Advantage plans) and seeks to achieve savings by capping non-economic damages in medical liability lawsuits.[26]

Adds$230 billion to the deficit[27]

Medicare Solvency

Extends Medicare Part A Trust Fund solvency by 12 years to 2029. [28]

Unclear.  "Medicare will be able to deliver on its critical mission to seniors today and future generations."[29]    

Eliminates cost-savings, including development of new delivery systems, that promote Part A Trust Fund solvency.

 

Conclusion

American families and people who rely on Medicare and/or Medicaid have much at stake in the Supreme Court's decision on health care reform. Additionally, the Ryan/Republican budget (which includes repeal of ACA) aggressively slashes critical programs including Medicaid and would transform Medicare into a voucher program.  Medicare and Medicaid were created in 1965 because average citizens could not afford health care coverage, especially when faced with a catastrophic health event and its costs. Unfortunately, over 50 million Americans remain uninsured today.[30] If ACA is repealed, or the Ryan/Republican budget is implemented, millions more will go without access to health coverage and care.

 


[1]See Weekly Alerts “The Second Anniversary of Health Care Reform is Good News – Will There be a Third?” (March 21, 2012) available at: http://www.medicareadvocacy.org/2012/03/21/the-second-anniversary-of-health-care-reform-is-good-news-will-there-be-a-third/ ; and “Health Care Reform on Trial” (March 29, 2012), available at: http://www.medicareadvocacy.org/2012/03/29/healthcare-reform-under-scrutiny-at-the-supreme-court/
[2] See, e.g., the website maintained by the Department of Health and Human Services at: http://www.healthcare.gov/law/features/index.html.
[3] “Path to Prosperity – Fiscal Year 2013 Budget Resolution, House Budget Committee, Chairman Paul Ryan of Wisconsin” (March 2012), available at:  http://budget.house.gov/UploadedFiles/Pathtoprosperity2013.pdf.
[4] “Statement of Robert Greenstein, President, on Chairman Ryan’s Budget Plan” Center on Budget and Policy Priorities (March 21, 2010) available at: http://www.cbpp.org/files/3-21-12bud-stmt.pdf
[5] Center on Budget and Policy Priorities, Paul Van De Water, “Medicare in the Ryan Budget” (March 28, 2012), available at: http://www.cbpp.org/files/3-28-12health.pdf
[6]Note that this chart is adapted from a chart in a previous Weekly Alert “Happy Anniversary, Health Care Reform” (March 23, 2011), available at: http://www.medicareadvocacy.org/2011/03/23/happy-anniversary-health-care-reform/
[7]Patient Protection and Affordable Care Act (PPACA), §§ 3601, 3602.  Healthcare reform comprises two statutes: the Patient Protection and Affordable Care Act (Pub. Law 111-148), enacted March 23, 2010), and the Health Care and Education Reconciliation Act of 2010 (Pub. Law 111-152), enacted on March 30, 2010.
[8] Center on Budget and Policy Priorities (CBPP), Paul Van De Water, “Medicare in the Ryan Budget” (March 28, 2012), available at: http://www.cbpp.org/files/3-28-12health.pdf
[9] PPACA §§ 3203,3301, 3315 4103, 4104, HCERA § 1101, amending 42 U.S.C. §§1395l(a)(1),  1395w-22(a)(1)(B); and adding  42 U.S.C. §1395w-114A.   
[10] CBPP, Van de Water, infra.
[11] PPACA §§ 3308, 3402, amending 42 U.S.C. §§ 1395r(i), 1395w-113(a).   
[12] CBPP, Van de Water, infra.  Note that a similar provision is included in the President’s proposed 2013 Budget; see, e.g., Weekly Alert “The President’s Proposed 2013 Budget: Impact on Medicare” (February 17, 2012), available at: http://www.medicareadvocacy.org/2012/02/17/the-presidents-proposed-2013-budget-impact-on-medicare/
[13] HCERA §§ 1102, amending 42 U.S.C. §1395w-23.    
[14] PPACA, §§ 6401-6411, HCERA § 1304.   
[15] Congressional Budget Office, H.R. 2, Repealing the Job-Killing Health Care Law Act, supra.
[16] PPACA §§ 3001-3015. 
[17] House Republican Budget – “Path to Prosperity”, infra, p. 53.
[18] PPACA §§ 3021, 3022, adding 42 U.S.C §§ 1315a, 1395jjj.
[19] PPACA § 2602, adding 42 U.S.C. § 1315b. 
[20]  PPACA §§ 3302, 3303,amending 42 U.S.C. §§ 1395w-114(a),(b) . 
[21] CBPP, Van de Water, infra.  As noted in the CBPP report, although the current Ryan plan is not specific about this point, last year’s similar proposal included this change, as well as a medical savings account that would purport to cover additional premium and cost-sharing, but would likely be inadequate to actually do so.
[22] Edwin Park, Matt Broaddus, Medicaid Block Grant Would Shift Financial Risks and Costs to States, (Center for Budget and Policy Priorities, February 23, 2011) http://www.cbpp.org/cms/index.cfm?fa=view&id=3409
[23] Center for Budget Policy and Priorities, “Ryan Medicaid Block Grant Would Cut Medicaid by One-Third by 2022 and More After That”, available at: http://www.cbpp.org/cms/index.cfm?fa=view&id=3727.
[24] "Preliminary Analysis of the President’s Budget for 2012," March 18, 2011, http://www.cbo.gov/doc.cfm?index=12103
[25] See “New Ryan Budget Would Transform Medicare and Medicaid” by Marilyn Werber Serafini, Kaiser Family Foundation (March 20, 2012), available at: http://www.kaiserhealthnews.org/stories/2012/march/20/ryan-budget-medicare-medicaid-republicans.aspx.
[26] House Republican Budget – “Path to Prosperity”, infra, p. 55.
[27] Congressional Budget Office, H.R. 2, Repealing the Job-Killing Health Care Law Act. Feb 18, 2011, available at: http://www.cbo.gov/doc.cfm?index=12069
[28] "2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds," August 5, 2010, https://www.cms.gov/ReportsTrustFunds/downloads/tr2010.pdf.  
[29] House Republican Budget – “Path to Prosperity”, infra, p. 55.
[30]Kaiser family Foundation.  http://www.kaiseredu.org/Tutorials-and-Presentations/Overview-of-the-Uninsured.aspx 

 

 

 

 

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