Did Obamacare Help or Hurt Medicare?

Medicare Takes the Good and Bad

Affordable Care Act Obamacare Medicare
Obamacare improved Medicare in many ways. MCCAIG/E+/Getty Images

If you talk straight politics, you may see only good or bad, black or white, when it comes to the Affordable Care Act, aka Obamacare. In the real world, there are two sides to the coin.

Obamacare aims to take $716 billion from Medicare to foot the bill. Those dollars were not to be taken all at once but were to be drawn over a decade. Between 2013 and 2022, Medicare is expected to take cuts in the following areas:

  • $260 billion from hospital services
  • $156 billion from Medicare Advantage
  • $114 billion from certain Medicare, Medicaid, and CHIP provisions
  • $66 billion from home health services
  • $56 billion from disproportionate share hospital (DSH) payments*
  • $39 billion from skilled nursing services
  • $33 billion from other services
  • $17 billion from hospice services*

* $25 billion may be subtracted from this budget due to other anticipated spending changes to DSH payments as well as Medicaid and CHIP provisions.

Taking money from one healthcare program to fund another has been controversial in political circles. With fewer dollars to fund Medicare, can the program remain viable? Worse, will it hurt Americans?

Though Obamacare draws on funds from Medicare, it also implemented changes that brought positive changes for the health of seniors and those with disabilities.

  • Preventive care. Obamacare instituted Medicare Wellness Visits as a free service to Medicare beneficiaries. This visit gives you one-on-one time with your doctor to review your medical history and the need for preventive screening tests. If your doctor accepts assignment, many of those tests, including cancer screening, will also be free.
  • Decreased drug costsPart D costs were negotiated down under Obamacare. Equally important for your wallet, the coverage gap in prescription drug coverage will gradually decrease until it closes in 2020. Closing the gap, also known as the "donut hole", may save tens of thousands of dollars for seniors on multiple medications.
  • Improved hospital care. Obamacare has put legislation in place that penalizes hospitals that do not meet certain quality measures or that lead to your needing to be readmitted in a short period of time. This incentivizes hospitals to improve care quality, keeping you healthier and out of the hospital.
  • Reducing Medicare fraud. Measures have been taken to decrease abuse and fraud to Medicare. More than $4 billion has been saved every year since the Affordable Care Act was enacted in 2010, approximately twice the annual savings compared to years preceding the Act.
  • Extension of the Medicare Trust Fund. The Medicare Trust Fund is expected to be solvent 13 years longer than before Obamacare. This means that Medicare has enough funds to pay 100 percent of anticipated Part A costs until 2030. Savings to Medicare under the Affordable Care Act have actually extended the life of Medicare.

No matter how you look at it, Medicare has taken both good and bad from the Affordable Care Act. What future health care reform brings, we will have to wait and see.

Sources:

Boccuti B, Casillas G. Aiming for Fewer Hospital U-turns: The Medicare Hospital Readmission Reduction Program. The Henry J. Kaiser Family Foundation. http://kff.org/medicare/issue-brief/aiming-for-fewer-hospital-u-turns-the-medicare-hospital-readmission-reduction-program/. Published January 29, 2015.

Congressional Budget Office. Letter from Director Douglas W. Elmendorf to Speaker of the House John Boehner. http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf. Published July 24, 2012.

Van de Water, PN. Medicare is Not Bankrupt: Health Reform Has Improved Program’s Financing. Center on Budget and Policy Priorities. http://www.cbpp.org/research/health/medicare-is-not-bankrupt. Updated July 30, 2015. Accessed August 10, 2015.

The White House. The Affordable Care Act: Strengthening Medicare. https://www.whitehouse.gov/share/strengthening-medicare. Updated May 8, 2013. Accessed August 10, 2015.

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