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Medicare and Health Care Reform

Many senior citizens are asking the $64,000 question: How does Health Care Reform impact Medicare? To answer that critical question, the following summary outlines the impact of Health Care Reform, also known as the Affordable Care Act, on Medicare.

You can learn some of the specifics of the Medicare and Health Care Reform by visiting one of articles below.

• Health Reform and Medicare Advantage
• How Health Reform Makes Medicare Stronger
• What is the Medicare Payment Advisory Board?

Costs of Medicare Reform

The Affordable Care Act will result in $455 billion in spending cuts for Medicare over the next decade. Proponents of health care reform claim Medicare benefits will not be reduced, but that cost savings will come primarily from reducing waste, fraud, and abuse within the Medicare system.

Plugging the Hole of Medicare Insolvency

Many seniors are all too familiar with the dreaded 'donut hole' in prescription drug coverage. The donut hole refers to seniors who reach the $2,830 coverage limit, then must pay $3,610 out of pocket for drugs before prescription coverage picks up again at $6,440. The Affordable Care Act authorizes $250 to be sent to those currently in 'the hole' and bridges the gap in coverage over the next few years.

Health Reform's Effect on Wellness and Preventative Care

Beginning in 2011, senior citizens are authorized to receive a free annual preventative care checkup, along with free screenings such as high blood pressure and certain types of cancer, including colon cancer and breast cancer. This is a huge benefit to seniors, who – in the past – usually had to pay a copay or fee for preventative and diagnostic care.

Medicare Advantage and Health Reform

Medicare Advantage programs, private health plan options that are part of the Medicare program, will see the most impact from the Affordable Care Act. Many Medicare Advantage Programs offer extra coverage and some of those 'perks' may be dropped as Medicare Advantage subsidies are reduced to be brought in line with the cost of other Medicare benefits. Medicare Advantage payment rates are slated to be frozen in 2011 and then reduced over the next few years.

Medicare Advantage providers will also be forced to spend at least 85% of every dollar they receive from premiums on health care expenses, rather than administrative costs, salaries and profits. It remains to be seen how this will affect your premium as a senior, but it's likely that it could result in savings on coverage.

Health Reform and Productivity Savings

Medicare shows large cost differences throughout the country with no correlation in health care outcome. The Affordable Care Act provides an outlet for Medicare to try various payment systems that are based on the quality of care rather than a quantity of services. Ultimately this ensures that you, as a senior, receive the best care at the lowest possible cost.

The Bottom Line

The bulk of the changes to Medicare are aimed at increasing the solvency of the Medicare program, which at its current rate, is slated to be 'in the red' within the next few decades. It is essential to stay informed as we see the details of these various efforts come out over the upcoming year.