The Affordable Care Act (ACA), signed into law on March 23, 2010, aims to provide greater access to health care coverage, improve the quality of services delivered and reduce the rate of increase in health spending. The ACA provides new ways to help hospitals, doctors and other health care providers coordinate care for beneficiaries so that health care quality is improved and unnecessary spending reduced. Many seniors are already benefiting from provisions of the law such as receiving preventive services and paying lower Medicare prescription drug costs. Below are some of the ways that the Affordable Care Act is helping seniors.
Medicare Benefits Expanded
- The ACA expanded Medicare benefits, resulting in more savings for seniors. Medicare beneficiaries will save, on average, about $5,000 over the next 10 years due to lower drug costs, free preventive services and reductions in the growth of health spending. Since passage of the ACA, more than 7.9 million people with Medicare saved over $9.9 billion on prescription drugs.
Preventive Services and Annual Wellness Visit
- Medicare beneficiaries are eligible to receive many preventive services with no out-of-pocket costs. These include flu shots, tobacco cessation counseling, as well as no-cost screenings for cancer, diabetes and other chronic diseases. Seniors can also get an annual wellness visit so they can talk to their doctor about any health concerns. Because of the ACA, over 37 million seniors have received at least one of these preventive services with no out-of-pocket costs in 2013.
Lower Medicare Part B Premiums
- ACA reforms are making Medicare more efficient and reducing overall health care costs, which has helped keep Part B premiums from rising. In 2014, the Medicare Part B premium is $104.90 and the Part B annual deductible is $147, the same as in 2013. The 2013 Part B monthly premium – $104.90 – was lower than previously projected by the Medicare trustees.
Lower-Cost Prescription Drugs
- The ACA reduces prescription drug prices for seniors and closes the coverage gap, known as the “donut hole.” Medicare beneficiaries who fall into the coverage gap, known as the "donut hole," automatically receive a discount on prescription drugs. Each year, beneficiaries pay a reduced cost for brand name and generic drugs in the coverage gap. The law closes the coverage gap in 2020.
- In 2014, Medicare beneficiaries in the donut hole receive a 52.5 percent discount on brand-name drugs and a 28 percent discount on generic drugs. Seniors who reach the donut hole will save, on average, about $1,265 per beneficiary. Nearly four million people with Medicare who were in the donut hole in 2010 received a one-time, tax-free $250 rebate from Medicare to help pay for prescription drug costs.
Improvements for Medicare Advantage Plan Members
· Private Medicare Advantage (MA) plans are getting stronger and less expensive. Since the passage of the ACA, the average MA premium has declined by approximately 10 percent and enrollment has increased by 33 percent (about 15 million beneficiaries).
- Starting in 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.
- MA plans also can no longer charge enrollees more than traditional Medicare for chemotherapy administration, skilled nursing home care and other specialized services.
Medicare Fraud, Waste and Abuse
- The ACA includes new resources and tools to protect taxpayer dollars by preventing fraud in Medicare and Medicaid by building on the efforts of the Department of Health and Human Services and the Justice Department. Over the past five years, the government recovered over $19.2 billion from individuals and companies seeking fraudulent payments. There are also tougher penalties for people who steal from Medicare and more law enforcement to identify criminals abusing the law and beneficiaries.
Medicare Delivery System and Payment Reforms
- The ACA establishes the Center for Medicare and Medicaid Innovation to test new ways of delivering care that are intended to improve quality while reducing the rate of growth in Medicare spending. Examples include programs to reduce unnecessary hospital readmissions by coordinating care and services for patients when they leave the hospital. Other provisions provide for the development of Accountable Care Organizations, bundled payments and medical homes – all intended to provider higher-quality, coordinated care for beneficiaries.
Helping Americans of All Ages
The ACA helps seniors and Americans of all ages. The law stops insurance companies from denying coverage to children with pre-existing conditions; prohibits insurance companies from taking away coverage when someone needs services, eliminates lifetime limits on insurance coverage, allows young adults to stay on their parents’ plan until they turn 26 and provides assistance to employers to help them continue providing retiree health insurance benefits. In 2014, the following ACA benefits go into effect, improving health care for more individuals and families.
- Requiring guaranteed issue and renewability of health insurance regardless of health status and allowing rating variation based only on age (limited to a 3 to 1 ratio), geographic area, family composition and tobacco use in the individual, small group market and the health insurance exchanges.
- Prohibiting annual limits on the dollar value of coverage.
- Creating state-based health insurance marketplaces where individuals and small businesses with up to 100 employees can purchase qualified coverage.
- Providing refundable, advance tax credits and cost sharing subsidies to eligible individuals to help pay for health insurance.
- Requiring U.S. citizens and legal residents to have qualifying health coverage or pay a phased-in tax penalty. If affordable coverage is not available, an individual will be exempt from this requirement.
- Expanding Medicaid (optional for states) to individuals not eligible for Medicare under age 65 with incomes up to 133 percent of the federal poverty level ($15,521 for an individual in 2014) and providing enhanced federal matching payments for new eligibles.
- Permitting states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200 percent of federal poverty level ($15,521-$23,340 for an individual in 2014) who would otherwise be eligible to receive premium subsidies in the exchange.
- Permitting employers to offer employees rewards of up to 30 percent, potentially increasing to 50 percent, of the cost of coverage for participating in a wellness program and meeting certain health-related standards.
Government Relations and Policy, April 2014