The Affordable Care Act (ACA), signed into law on March 23, 2010, has improved benefits and the quality of care provided to Medicare beneficiaries while reducing out-of-pocket costs and extending the solvency of the Part A Hospital Insurance trust fund by more than a decade.
In December 2018, federal district judge Reed O’Connor ruled that the ACA’s “individual mandate” was unconstitutional after the December 2017 Tax Cuts and Jobs Act zeroed out the penalty for going without health insurance. But based on the individual mandate falling, O’Connor ruled that the entire ACA should be invalidated.
In March 2019, the U.S. Court of Appeals for the 5th Circuit agreed that the individual mandate was unconstitutional, but sent the case back to the trial court for additional analysis about whether the ruling would require the entire ACA to be overturned.
In March 2020, the U.S. Supreme Court agreed to hear the case. On June 25, 2020, in the midst of the coronavirus pandemic, the Trump Administration filed a brief with the Supreme Court urging them to invalidate the entire ACA. The case could be argued at the Supreme Court as early as October 2020.
If the lower court decision is upheld, Medicare benefit improvements in the ACA would be eliminated, including closing the Medicare Part D prescription drug coverage gap, known as the “donut hole;” preventive benefits and annual wellness exams with no deductibles or copayments; and improvements in the quality of care beneficiaries receive. In addition, Medicare cost savings achieved in the ACA – cutting waste, fraud and abuse, eliminating taxpayer handouts to insurance companies who offer private Medicare plans and slowing the rate of increase in payments to some providers – would be eliminated. As a result, the exhaustion of reserves held in Medicare’s Part A Trust Fund will be accelerated.
Lower-Cost Prescription Drugs
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 2020, for costs in the coverage gap phase, beneficiaries pay 25 percent for both brand-name and generic drugs, with plans paying the remaining 75 percent of generic drug costs — which means that, effective in 2020, the Part D coverage gap was fully phased out.
Preventive Services and Annual Wellness Visit
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. Before the enactment of the ACA, beneficiaries were required to pay 20 percent of the costs for most preventive services. Because of the ACA, over 40 million seniors received at least one preventive service with no out-of-pocket costs in 2016, and over 10 million beneficiaries had an annual wellness visit.
Lower Medicare Premiums, Deductibles and Cost Sharing
The ACA reduced the rate of increase in Medicare payments to providers and, over a six-year period, reduced payments 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. 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.
Medicare Delivery System and Payment Reforms
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 unnecessary hospital readmissions by coordinating care and services for patients when they leave the hospital and to reduce hospital-acquired infections.
Improvements for Medicare Advantage Plan Members
Private Medicare Advantage (MA) plans are getting stronger and less expensive. From 2010-2020, the average MA premium decreased by 43 percent and enrollment increased by 117 percent – to 24.1 million Medicare beneficiaries (36 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.
Helping Medicare Beneficiaries Eligible for Medicaid
The ACA includes important improvements for those eligible for both Medicaid and Medicare, known as the dually eligible. The ACA eliminated Part D cost sharing for some dually eligible individuals. It also created new offices and initiatives aimed at improving care coordination—the way health care providers work together and with patients to provide optimal care. The ACA also created the Community First Choice Option to increase the ability of states to provide home- and community-based services through their Medicaid programs. This is important for older and disabled Americans who can receive long-term services and supports in their homes and communities, thus avoiding unnecessary and costly institutional care.
Helping Americans Nearing Medicare Eligibility
Over 4.5 million Americans age 55-64 are receiving health insurance through the ACA’s Medicaid expansion and Marketplaces. The health insurance reforms in the ACA, such as requiring insurance companies to cover people with pre-existing conditions and to limit age rating to 3:1, are particularly important to older Americans without employer sponsored health insurance who are not yet eligible for Medicare. And it benefits the Medicare program to have older adults enter the program in good health.
National Committee Position
The ACA includes many benefit increases for seniors on Medicare, and many program improvements that help to drive the cost of health care down and extend the solvency of the Part A trust fund. In addition, the Affordable Care Act puts many initiatives into place that improve quality of care for seniors.
Most seniors would be significantly burdened by cuts to their drug and preventive care benefits if the ACA is invalidated since half of all Medicare beneficiaries live on incomes of $29,650 or less per year and spend an average of 24 percent of their Social Security check on out-of-pocket health care expenses,.
Likewise, the acceleration of the insolvency of the Part A trust fund caused by overturning the ACA would result in a 10 percent cut in hospital benefits when reserves are exhausted.
Congress must reenact the Medicare provisions in the ACA if the Supreme Court upholds the 2018 District Court decision.