Medicare provides healthcare for more than 60 million Americans.1 So, it’s not surprising that strengthening and improving that program is a major goal of healthcare reform in the Affordable Care Act (ACA), or “Obamacare,” passed in March 2010. According to Kathleen Sebelius, then-Secretary of the U.S. Department of Health & Human Services, rather than change or diminish your current Medicare benefits, the ACA is designed to improve Medicare by introducing new benefits and savings with an emphasis on delivering quality care.
What is Medicare?
Many people confuse Medicare and Medicaid. Although some people benefit from both (dual eligibility), Medicare and Medicaid are two different programs.
Learn more about Medicare and what it covers, or go to www.Medicare.gov if you’d like to learn more about eligibility and applying for and receiving benefits.
How has the ACA reformed Medicare?
In keeping with the goal of improving the quality of care and eliminating waste without reducing benefits, the ACA has many provisions designed to improve and strengthen Medicare. Even if you don’t currently receive Medicare benefits, you’re still affected by changes to Medicare because your tax dollars fund them. And since most of us will one day become Medicare beneficiaries, you may also be interested in how your future coverage will be affected under the ACA.
Extending solvency of Medicare Trust Fund until 2029
According to the Centers for Medicare & Medicaid Services (CMS), Medicare is the second largest social insurance program in the U.S. It had $829.5 billion in total expenditures in 2020.2 As you can imagine, maintaining such a program is a challenging and costly task. Many are concerned that the country is running out of time and money to do it. The ACA intends to save Medicare for years to come by doing the following:
- Eliminating waste, fraud, and inefficiency – The ACA extends the solvency of the underlying trusts that fund Medicare until 2026 (initially in the legislation, the year given was 2029) by slowing the spending rate and reducing payment errors, waste, fraud, and inefficiency. A few examples follow:
- Providing incentives to transition to Electronic Health Records (EHRs) – EHRs have been shown to reduce errors, such as ordering duplicate tests, and help healthcare providers and patients make better decisions because their records are readily available for review.
- Bundling payments for services – This is another way the ACA attempts to address inefficiencies in the system. For example, if you’ve ever had coronary bypass surgery, you probably received separate bills from each provider involved in your care and for each test and service provided. As a way to cut costs and improve care, the ACA calls for a five-year, voluntary pilot program that will attempt to streamline the billing process by billing for each “episode of care” (for example, coronary bypass surgery) instead of each service (for example, administering anesthesia). The program, Bundled Payments for Care Improvement (BPCI), now BPCI Advanced, has just been extended through 2025.
- Preventing, detecting, and fighting fraud – The ACA also set aside $350 million to prevent, detect, and fight fraud in Medicare and other government health insurance programs. The cost of this part of the program has already generated savings. Learn more on protecting yourself and Medicare from fraud.
- Reducing annual payment increases to insurance companies, hospitals, and nursing homes – Another way the ACA is intended to extend the life of Medicare is by reducing annual payment increases to insurance companies, hospitals, and nursing homes from Medicare.
Healthcare costs take a particularly heavy toll on Americans who have fixed, and in many cases, limited income, as is often the case for retirees and anyone suffering from a debilitating disease that makes it difficult to work. The ACA provides some relief by doing the following:
- Eliminating the “doughnut hole” in prescription coverage
- Eliminating coinsurance for preventive services
- Providing a free medical exam
Eliminating the “Doughnut Hole” in prescription coverage
One of the most significant expenses seniors face in the U.S. is the cost of prescription drugs. As we age, we typically need more medications to stay healthy, which is the case regarding our cardiovascular health. One way the ACA addresses this problem is by having Medicare Part D pay more of the cost of prescription drugs by providing discounts on name-brand prescription drugs and working toward closing the gap in prescription drug coverage (the “doughnut hole”).
The doughnut hole is the coverage gap after your plan stops paying for your drugs ($4,660 in 2023) and before you reach the benchmark required for catastrophic coverage ($7,400 in 2023).3 While in the doughnut hole, you’re responsible for paying 100% of the cost of your medication.
The ACA called for creating a Medicare Coverage Gap Discount Program to help people pay for their medication while in the doughnut hole. To qualify for the Medicare Coverage Gap Discount Program, you must meet the following criteria:
- Be enrolled in the Medicare Prescription Drug Plan or a Medicare Advantage plan that includes prescription drug coverage
- NOT receive Extra Help, a Medicare and Social Security program that helps Medicare beneficiaries with limited incomes and resources pay for their prescription drugs
- Have reached the gap in coverage (doughnut hole) that qualifies you for the discount
Check your Explanation of Benefits (EOB) statement regularly to see how much you’ve spent on covered prescription drugs and to help you determine when you entered the doughnut hole and can expect to receive discounts on your covered medications.
Also, be aware that prescription drug coverage under Medicare can be affected by other factors such as other insurance coverage or assistance, including but not limited to state aid or other discount drug programs and whether the company that makes your drug has agreed to participate in the ACA’s discount drug program.
Ask for help
Still confused? If you have any questions, ask. Mistakes are common, and it’s up to you and your family to ensure you receive all your entitled benefits according to your plan and personal situation. Contact your plan administrator when you need more information. And, if you can’t agree with your drug plan about a benefit you should’ve received, you can always appeal. Call your State Health Insurance Assistance Program (SHIP) or 1-800-MEDICARE (1-800-633-4227) for assistance.
Eliminating coinsurance for preventive services
These provisions of the ACA are intended to encourage prevention by making it less expensive for individuals to stay healthy by eliminating coinsurance for preventive services such as colorectal cancer screening, mammograms, and cardiovascular screening (like cholesterol checks and screening for diabetes). You’re eligible for this benefit if you have Medicare or Medicare Advantage (check with your plan to be sure) and your doctor or other healthcare provider agrees to participate.
Other qualifying services include the following:
- Tobacco use cessation counseling – A coinsurance and deductible will apply if you have already been diagnosed with a tobacco-related illness.
- Screenings – These include the following if certain coverage criteria apply:
- Bone mass measurement
- Cervical cancer screening, including Pap smear tests and pelvic exams
- Cholesterol and other cardiovascular screenings
- Colorectal cancer screening (except for barium enemas)
- Diabetes screening
- Flu, COVID-19, pneumonia, and hepatitis B shots
- HIV screening for people at an increased risk or who ask for the test
- Medical nutrition therapy to help people manage diabetes or kidney disease
- Prostate cancer screening (except digital rectal examinations)
Providing a free physical exam
The ACA’s changes to Medicare allow seniors to have an annual wellness visit at no cost. If you’re new to Medicare, this benefit includes your “Welcome to Medicare” physical during your first year of coverage under Medicare Part B. This exam aims to review your current state of health and discuss other preventive services you should consider. After this first visit, you can then take advantage of the free annual “Wellness Exam” to reassess and continue with your plan to live a healthy lifestyle.
Changes in Medicare advantage
In 2022, nearly 48% of all seniors received Medicare benefits through Medicare Advantage Plans (Medicare Part C),4 of which are health plans similar to health maintenance organizations (HMOs) or preferred provider organizations (PPOs) that are run by Medicare-approved private insurance companies. Medicare Advantage plans provide the same services covered by Medicare Parts A and B, just like original Medicare. Still, they typically offer additional coverage for services such as vision, dental, hearing, and health and wellness, and many include prescription drug coverage (Medicare Part D).
The ACA has made the following changes to these plans intending to lower costs and provide better benefits and higher-quality care:
- Phasing out extra payments to Medicare Advantage plans
- Having plans that may eliminate optional services
- Requiring Medicare Advantage plans to cover still all items and services offered by traditional Medicare
Visit the following sites for other useful information about Medicare, its programs, and how they have been affected by the ACA: