The Patient Protection and Affordable Care Act will affect seniors in a number of ways. They will benefit from reductions in cost sharing for prescription drugs and for preventive services. There will however be reductions in current benefits some seniors now gain from Medicare Advantage plans and increases in premiums for high income people. Provider payment rate cuts if extended for several years could have implications for access to care. Many new provisions that will affect payment and delivery system reforms and most likely benefit seniors but could also potentially harm access to care.
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The population over the age of 65 will be affected in a number of ways by the Patient Protection and Affordable Care Act (PPACA) even though the law is primarily aimed at non-elderly population. There will be increases in premiums for high-income people, cutbacks in the advantages some seniors gain from Medicare Advantage plans, and reductions in cost-sharing in the prescription drug benefit and for preventive services. It is likely that the sustainable growth rate (SGR) formula will continue to be overridden periodically to head off major fee cuts but not permanently fixed. Therefore physician fees will continue to be adjusted upward by less than the inflation rate for medical practices. There will still be some additional efforts to increase primary care fees to encourage access in Medicare. But increased demand for services by the non-elderly who will become insured could potentially threaten access to care for seniors. Reductions in rates for other providers such as hospitals and nursing homes have been suggested by the Medicare Payment Advisory Commission (MedPAC) and the Congressional Budget Office (CBO) for several years and should not adversely affect access for Medicare beneficiaries,1 though having them in place for several years could lead to significant differences between private and Medicare rates.2 There are large numbers of provisions that introduce new payment and delivery system reforms that could either benefit or harm access to care for seniors.
The PPACA threshold for the higher income-related Medicare Part B premiums ($85,000 for an individual and $170,000 for a couple) is frozen from 2011 through 2019. Freezing the threshold will have the effect of making an increasing number of people each year subject to the higher premiums. This provision provides $25.0 billion in revenue.3 PPACA also reduces the Medicare Part D subsidy for those with incomes above $85,000 (for an individual) and $170,000 (for a couple), effective 2011. Reducing the Medicare Part D subsidy represents savings in the amount of $10.7 billion over ten years making this a relatively small provision of the bill.4
It is interesting to note that the current Medicare premium is $110.50 per month and increases to $154.70 per month when the $85,000/$170,000 threshold is reached and continues to increase as incomes increase. Those eligible for Medicare Savings Programs (MSP) will continue to receive assistance with premiums up to 120 percent of the federal poverty level. Individuals with incomes above MSP eligibility levels will pay the full premium. This amounts to about 10 percent of income for those just above MSP levels. Because premiums do not increase with incomes, premiums as a share of incomes decline until the high-income threshold is reached. Thus, low-income seniors with incomes above Medicaid or MSP eligibility levels will have to pay more in Part B as a percentage of income than will non-elderly individuals under health reform. Further, the benefit package seems to be at about the level of a 70 percent actuarial value plan, or a silver plan, under health reform; however, unlike the plans offered to the non-elderly, there are no out-of-pocket limits. Individuals can pay more for more comprehensive coverage through Medi-gap policies. This is similar to buying up to a gold or a platinum plan in an exchange. Without supplemental coverage, there are circumstances in which individuals will have to pay more for Medicare coverage and obtain less protection than it will now be offered to the non-elderly.
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