Understanding Healthcare Reform’s Long-Range Impact on Medicare and Medicaid
The ACA, also known as the Affordable Care Act or “Obamacare,” expands prescription drug benefits and helps hold down premium costs for Medicare recipients. Together, Medicare and Medicaid currently insure nearly 93 million Americans, but these changes will also make Medicare accessible to more Americans.
Medicare’s healthcare reform changes focus on cost containment
Complete closure of the “donut hole”: By the end of the decade, you won’t have to worry about navigating through the Medicare prescription drug coverage gap known as the donut hole. On top of the 50 percent brand-name drug discount pharmaceutical companies were required to provide beginning in 2011, the government has now begun phasing in additional subsidies for both brand name and generic drugs until the donut hole is closed in 2020.
Medicare Advantage cuts: The government reduced the amount of subsidies it provides for Medicare Advantage coverage, so if you have a private Medicare Advantage plan to help you pay for health-related expenses not covered under traditional Medicare, you may have seen some reductions in your coverage beginning in 2012. The plans can’t reduce benefits for your basic health needs, but they will be able to cut coverage for services Medicare doesn’t consider primary.
Premium changes for Medicare Parts B and D: From 2011 through 2019, the premiums you pay for Medicare Part B coverage (doctor’s visits, medical equipment, etc.) won’t go up. However, if your annual income is more than $85,000 (for an individual), or $170,000 (for a couple), the government is going to reduce the amount of Medicare Part D premium subsidy you receive to help pay for prescription drugs.
Reduction in catastrophic coverage threshold: Beginning in 2014, Medicare will reduce the amount of money you’ll have to pay out of pocket before your Medicare Part D catastrophic prescription coverage kicks in. However, the reduction will only last five years, until 2019.
Changes to Medicare Part D cost-sharing: In 2012, Medicare made the costs you pay out of pocket for home and community-based care the same as the amount you’d pay if you received care in a hospital, nursing home, or other health-care institution.
Healthcare reform broadens Medicaid enrollment
Most of the Medicaid changes outlined in the healthcare reform law center around cost containment and rewarding doctors and hospitals that provide quality care to Medicaid beneficiaries. However, in 2014, a landmark change in the 45-year-old program is slated to take effect: All adults under age 65 who meet certain income guidelines will be eligible to enroll in Medicaid. (Some states instituted the new Medicaid enrollment guidelines early.)
Medicaid has always insured only children, adults with children, and people with certain disabilities. However, the new law opens up the program to also include adults without children and pregnant women. Enrollees will still have to meet certain income guidelines. Specifically, household incomes won’t be able to exceed 133 percent of the federal poverty level (FPL). FPL is $10,830 for an individual and $22,050 for a family of four.