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Letter to House Ways and Means & Energy and Commerce Cmtes: ACA Repeal Will Drive Up Costs for Medicare Beneficiaries

This letter was also sent to Energy and Commerce Committee Chair Greg Walden along with members of both committees.

March 6, 2017

The Honorable Kevin Brady
Chair, House Committee on Ways and Means
1011 Longworth House Office Building
Washington, DC 20515

Dear Chairman Brady,

On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I write to ask you to reject proposals being considered as part of the Affordable Care Act (ACA) repeal that would harm seniors by driving up their out-of-pocket costs for prescription drugs and preventive services, and hastening Medicare’s insolvency.

Since passage of the ACA, nearly 12 million people with Medicare have saved over $26.8 billion on prescription drugs, an average of $2,272 per beneficiary. The ACA reduces prescription drug prices for seniors and closes the coverage gap, known as the “donut hole.”   Prior to passage of the ACA, Medicare beneficiaries paid 100 percent of the cost of their drugs when in the coverage gap; under the ACA, beginning in 2011, beneficiaries paid a reduced cost for brand name and generic drugs. In 2017, Medicare beneficiaries in the donut hole receive a 60 percent discount on brand-name drugs and a 49 percent discount on generic drugs. The law closes the coverage gap in 2020 when beneficiaries will pay 25 percent of the cost of their drugs, what beneficiaries pay now before entering the donut hole.

Under provisions of the ACA, Medicare beneficiaries are eligible to receive many preventive services with no out-of-pocket costs – no coinsurance or Part B deductible. These services include flu shots and tobacco cessation counseling, as well as screenings for cancer, diabetes, cardiovascular disease and other chronic diseases. Seniors can also get an annual wellness visit so they can talk with their doctor about any health concerns. Over 40 million seniors received at least one preventive service with no out-of-pocket costs in 2016, and over 10 million beneficiaries made an annual wellness visit. 

In addition, the ACA reduced the rate of increase in Medicare payments to providers and, over a six-year period, reduced overpayments to Medicare Advantage plans to bring them closer to the costs of care for a beneficiary in traditional Medicare. These reductions in Medicare spending, estimated by the Congressional Budget Office (CBO) to be $802 billion over ten years, are lowering costs for Medicare beneficiaries.

These reductions in spending not only make the Medicare program more financially sustainable, they reduce costs for seniors. The Part A deductible and copayments for inpatient hospital and skilled nursing facility care are based on hospital payments; lower payments mean lower out-of-pocket costs. The Medicare Part B premium, which covers 25 percent of program costs, and the Part B deductible, which increases at the same rate as the Part B premium, are lower than they were projected to be before passage of the ACA due to lower increases in program spending.

The ACA also includes important delivery system and payment reforms designed to bring down Medicare’s costs in ways that don’t harm care.  For example, the ACA established the Center for Medicare and Medicaid Innovation (CMMI) to develop and test new ways of delivering and paying for care that are intended to improve quality while reducing the rate of growth in Medicare spending. These include Accountable Care Organizations, bundled payments and medical homes – all of which are intended to provide incentives to physicians and others to provide high-quality coordinated care for beneficiaries, especially those with multiple chronic conditions and those dually eligible for Medicare and Medicaid. The ACA also aims to improve care and save costs through programs to reduce hospital acquired infections and unnecessary hospital readmissions by coordinating care and services for patients when they leave the hospital.

The ACA has improved Medicare Advantage plans for enrollees. From 2010-2017, the average MA premium is projected to have decreased by 13 percent and enrollment to have increased by 60 percent – to 18.5 million Medicare beneficiaries (32 percent). Since 2014, the ACA provides additional protections for MA plan members by limiting the amount these plans spend on administrative costs, insurance company profits, and items other than health care, to 15 percent of their Medicare payments. Also, due to the ACA, MA plans can no longer charge enrollees more than traditional Medicare for chemotherapy administration, skilled nursing home care and other specialized services.

The ACA is a highly complex piece of legislation that includes many benefit increases for seniors on Medicare, contains many program improvements that help to drive the cost of health care down and extends the solvency of the Part A trust fund.  For these reasons, we strongly believe that any replacement legislation should do no less than the ACA for our senior population.

Sincerely,

Max Richtman
President and CEO



   

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